Some 25.1% of the 1,500 households surveyed for the latest House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics, across the UK said that the value of their home had risen over the last month, while 4% said that prices had fallen.

This resulted in a HPSI reading of 60.5. This is the thirty-sixth consecutive month that the reading has been above 50.

Households in every region perceived that the value of their home rose in March, however there were significant regional variations, reflecting wider trends in pricing across the UK market.

Londoners perceived the biggest increase at 71.7, followed by those in the South East at 67.4 and East of England at 66.3. In Scotland and the North West the perceived rate of growth was slower at 53.3 and 54 respectively.

The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in March to 71.6, from 69.8 in February. March’s reading was the highest recorded by the index since August 2014.

The rise in future sentiment was driven by households in southern England, with those in the South East at 81, the East of England at 80.3 and London at 78.9 were notably more confident than those in the North East at 61.4 and Scotland also at 61.4.

‘The fundamentals for the UK housing market remain steady, especially around mortgage costs which remain at record lows. The imbalance between demand and supply of housing is also underpinning house prices. The delivery of new homes remains some 30 to 40% below the levels needed to start to address the annual shortfall of housing in the UK,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.

‘There have already been several large targeted government policies to try and boost development and ease the path of first time buyers and it is notable the future sentiment reading for 25 to 34 year olds is the highest it has been for 15 months,’ she pointed out.

‘As reflected in the index, the sound fundamentals of the market will combine to support overall prices in the coming year, but as the index also reveals, the market will continue to be multispeed across regions and price bands,’ she added.

Tim Moore, senior economist at Markit, explained that the latest survey is a clear signal that UK house prices have stayed on an upward trajectory throughout the first quarter of 2016.

‘One of the factors supporting price sentiment seems to be the expectation that interest rates will remain ultra-low for longer, and this belief has become more widespread so far this year. Households’ current price sentiment is stronger now than at any time over the past 17 months, but the economic landscape is not lacking in potential headwinds for buyer confidence,’ he said.

‘In particular, UK pay growth is uneven at best and slowing at worst, while at the same time some lenders have started to lower their maximum loan to income ratios. Stretched affordability is of course never far from any discussion of UK house prices but it could bite harder now for first time buyers, especially in London and surrounding hotspots,’ he added.

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