Posted on 1st June 2013

Confidence in House Prices Rising Helps to Stimulate the Market

Martin Williamson, Head of Residential Property
Figures just released show that 14% of homeowners perceived that the value of their homes rose in May, much as they felt they did in April. The North East was going in the right direction up until the end of April, but has been pegged back in the last four weeks, according to figures from the Knight Frank/Markit House Price Sentiment Index (HPSI.)

We are all fairly good judges of the worth of our own house because no-one understands the location, the area, the value of neighbouring homes and their own, better than the householder themselves. The fact that more householders are beginning to believe their homes are increasing in value is good news and is a further boost to the property market as it continues its long haul out of stagnation.

The overall trend for all regions is of an upward curve in confidence about the value of homes in the UK. The figures show that younger people, aged between 24 and 35, were the most optimistic that house prices would continue to rise for the next 12 months.

Thats crucial because they are very often the ones who are getting on the housing ladder. If they now believe a home they buy is likely to become an investment and they can make money on it and in a few years move to the next rung, they will be encouraged to act now.

Other factors are making existing homes more attractive too. The fact is that over the last few years some people who may otherwise have moved have been unable to because the dip in prices made it uneconomical.

Instead, they have been investing their spare money by improving their homes and extending them. A recent survey shows that 26% of British homes have been extended and almost half have a second toilet.

Many stranded home owners who have remained in good financial health through the lean years have improved their kitchens and bathrooms as well.

Although some extensions and improvements may affect the value of a home, prospective house purchasers will only pay so much in certain areas. So, in that knowledge, many of the improvements would have been done with comfort rather than investment in mind. When those home owners consider what they have, they will be confident they will get a good price because of the level of investment. They will know prospective buyers will be happy to move in to improved homes.

That may well be a major reason why people in the over 55s age group are also showing increased confidence that the value of their homes will improve.

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