British Homeowners Modestly Optimistic About Their House Values

The House Price Sentiment Index, or HPSI, now stands at 54.1, representing a slight uptick from last month, according to a monthly survey by global real estate consultancy Knight Frank and data firm IHS Markit released Friday.

Market sentiment among households has been volatile since Britons voted to leave the European Union at the end of June 2016 and amid the economic and political flux that persisted over the past year. Last July the index fell below 50 for the first time in three years—a leading indicator that home prices in the country are falling, according to the report.

The public’s views on housing prices began to turn around almost immediately following Brexit, but then took a second tumble in the run up to the snap general election last month as political uncertainty returned.

In July, slightly more optimism has returned to the market with 17% of households saying their house had increased in value, a modest uptick from the 15.9% that said so in June. Meanwhile, the portion of respondents who felt their home had lost value fell in July to 8.9%; last month, 9.3% had felt their homes  lost value.

“While U.K. house price sentiment ticked up slightly in July it remains subdued in comparison to longer term trends,” said Oliver Knight, an associate in Knight Frank’s residential research team, in the report. “Households still report that values are increasing, but at a more modest pace than before the E.U. Referendum, which remains consistent with wider housing market indicators.”

The survey also asks households whether they believe prices will increase over the next 12 months. That index rose to 62, a similarly modest uptick from June.

While it’s only one month since the general election, it looks as if the pre-election decline has given way to rising price sentiment. Although price sentiment is still a far cry from the heady days of mid-2014, when the index peaked at 63.2 and the future index peaked at 75.1.

London-dwellers and residents in the East of England—which includes areas like Cambridge, Essex and Suffolk—were the most optimistic in July, followed by the South East and Scotland. The North West was the only region of the country where sentiment showed prices falling in July.

“The latest survey signals a rebound in confidence for the first time in three months, but looking at the overall picture reveals that house price sentiment has shifted down a gear this summer,” said Tim Moore, senior economist at IHS Markit in the report.

“The resilient picture relative to longer-term patterns is likely helped by the ultra-low mortgage rate environment, improved credit availability and an entrenched shortage of supply across large parts of the country,” he said.