Confidence is returning to the housing market according to the release of the House Price Sentiment Index.  The research study is from Knight Frank and Markit Economics.  The most recent compilation has indicated that homeowners are expecting an increase in the value of their property for the first time in three years.  Of the responders 11% indicated that their property value had increased in the past month with 9.9% indicating they had experienced a decline in their home value.

The study considers any reading of over 50 as a rise and anything under 50 as a decline and the April index had a reading of 50.6.  This is the first time the index has been above 50 since June 2010.

The most optimistic age group in the report was that of responders aged 18 to 34 as well as those listed as owning homes in the London area. 

Much of the increase in optimism is being credited to the Help to Buy scheme which is expected to bring many first time buyers into the housing market.  The scheme is designed to assist buyers in obtaining loans.  The first part of the scheme helps buyers into newly constructed homes with an interest fee loan towards the buyer’s deposit for a home valued up to £600,000.  The second phase of the scheme starts next year and will offer mortgage lending guarantees.

Gráinne Gilmore, head of UK residential research at Knight Frank, remarked on the index saying “April’s sentiment survey suggests that the multi-billion pound Help to Buy mortgage scheme has injected a much-needed dose of confidence into the housing market, especially among young people.

“The Help to Buy scheme is designed to free up the mortgage market, and this is reflected in the surge in optimism over house prices seen among the generation of aspiring homeowners, aged between 25 and 34.

“It is still very early days for Help to Buy, but this area of the mortgage market will be closely watched in the months to come, in the hope that delivery of mortgage support for those who have only limited deposits matches the scheme’s initial promise.”

Markit’s senior economist, Tim Moore responded “April’s survey provides a snap-shot of how the Budget has influenced households’ perceptions of their property values. In terms of the price outlook, households reported the greatest post-Budget jump in sentiment since the stamp duty holiday extension in 2009.

“The latest survey suggests the Help to Buy scheme has boosted house price sentiment, alongside a continued improvement in mortgage availability and more concrete signs that current values are on the up.

“However, a mixed picture persists across the UK regions. The number of London households expecting a year ahead rise in their property value outnumbers those that anticipate a drop by five-to-one, against a ratio of around four-to-one in the South East and three-to-one across the UK overall.”

As property values increase homeowners will gain equity in their properties and will be able to qualify for better remortgage deals.  Current remortgage deals are quite attractive already and are expected to remain so through spring with low interest rates.