UK households perceived that the value of their property declined over the last month, for the thirtieth consecutive month. People are, however, more optimistic that house prices will rise in 2013.

The Knight Frank/Markit’s House Price Sentiment Index found that 7.7 per cent of homeowners reported that the value of their home had risen, down from 9.1 per cent in November. The proportion saying that the value of their home had declined remained steady at around 14 per cent. This resulted in a HPSI reading of 47.1, down from 47.6 in November – an HPSI reading of less than 50 indicates that prices are falling.

The future HPSI, which measures what households think will happen to the value of their property over the next year, fell back slightly in December, but still indicated that, on average, UK households expected prices to rise modestly in 2013.

The research found stark regional differences in outlook on prices. Households in six of the eleven regions expect price rises in 2013; London is the most optimistic with an HPSI reading of 61.6. Households in the south west (HPSI 56.3) are also upbeat about the trend in house prices over the next year, more so than the south east (54.5), for the first time since January 2010. Households in Yorkshire and the Humber (55.3), the north west (52.6) and the east of England (53.1) also expect price increases.

Households in five regions expect prices to decline over the next year, with the sharpest declines being anticipated in Wales (45.6) and the north east (48.0).

Most types of households are optimistic that prices will edge upwards, including those who own outright, those with a mortgage and those renting. The exception is those living rent-free (44.5), for example at home with their parents. When the results are broken down by age, all but those in the 18-24 age band (46.5) expect prices to rise next year.

“It is becoming increasingly clear that the housing market in the UK is not a homogenous entity. While looking at average house price movements can be useful for looking at broad trends in the market cycle, price movements are becoming more localised, a situation which is only exacerbated by the current constrained activity in the market,” Gráinne Gilmore, head of UK residential research at Knight Frank, said in a statement.

The Knight Frank/Markit House Price Sentiment Index (HPSI) survey was first conducted in February 2009 and is compiled each month. The survey is based on monthly responses from approximately 1,500 individuals aged 18-64 in Great Britain.