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House price expectations turn negative

Friday, 21 October 2011 9:06 AM

Expectations about future house prices dropped sharply in October as sentiment among public sector workers slumped.

The Knight Frank/Markit House Price Sentiment Index (HPSI) shows that home owners think prices fell for the 16th month in a row and at a faster rate than in September. A quarter of the 1,500 households surveyed thought the price of their home had fallen and just 7 per cent said it had risen.

Expectations about future price rises turned negative in October, falling to 47.7 from 53.6 in September, with anything below 50 indicating a fall. This is the lowest HPSI reading since May.

Workers in the public sector are more downbeat about the outlook and expect bigger price falls than people working in the private sector or not working.

Households in eight out of 11 regions expect prices to fall in the coming year, with people in the north east expecting the biggest declines. Londoners expect house prices to rise the most.

Tim Moore, senior economist at Markit, said: "This is the first snapshot of house price sentiment since the Bank of England announced its latest expansion of quantitative easing, and the survey therefore suggests that we are unlikely to see a repeat of the rebound in house prices that followed the first round of quantitative easing in early 2009."

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