‘Worrying’ signs over house prices

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Published: Thursday 16th April 2015 by The News Editor

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Signs of a “worrying” upward pressure on house prices have been reported by surveyors as the supply of fresh properties coming to market for buyers to choose from shrinks back further.

The Royal Institution of Chartered Surveyors (Rics) said that across the country, the proportion of surveyors expecting to see property values marching upwards in the coming year has grown to the strongest levels seen since spring 2014.

A net balance of 70% of surveyors across the UK predict house price gains in the next 12 months, marking a 10-month high.

Rics said that a balance of 21% more surveyors reported seeing house prices increasing rather than decreasing in March, up from a balance of 15% in February.

The growing house price momentum appears to have been driven by a further tightening in the supply of homes for sale, with most areas seeing a decrease in new properties coming on the market in March, compared with the previous month, Rics said. It marks the second month in a row that the number of homes coming on the market has shrunk back.

On average, surveyors expect house prices to increase by 2.5% over the next 12 months, and by 4.5% a year over the coming five years.

Simon Rubinson, chief economist at Rics, said it is “worrying” to see indications that house prices are poised for a further pick-up.

He said: “Underlying the trends visible in the latest survey is a very real housing crisis which will urgently need to be addressed by the next government.”

Northern Ireland continued to see the strongest house price increases in March, as well as recording the highest price growth expectations among surveyors for the coming three months. House prices in Northern Ireland fell particularly sharply as the economic downturn set in and Office for National Statistics (ONS) figures have shown that they still have some way to climb to return to their pre-crisis peak levels.

In Wales and Scotland, price gains over the coming three months are expected to be more moderate, Rics said.

The contracting supply of homes for sale has been particularly concentrated in England, amid suggestions that potential sellers are putting their plans on hold while they await the outcome of the general election, Rics said.

In London, a lack of prospective buyers saw the number of agreed sales fall for the 11th month in a row and an overall balance of 24% more surveyors there reported falls in the number of properties coming onto the market.

The upcoming election and recent changes to stamp duty, which have made the tax cheaper for the majority of home buyers liable to pay it, are leading to a more “volatile” picture generally, Rics said, with Scotland and Northern Ireland being the only areas in the UK to have seen consistent growth in housing market demand over the last six months.

As the supply of homes tightens, mortgage availability for first-time buyers with low deposits saved appears to be improving, surveyors found.

The deposits being put down by people taking their first step onto the property ladder were perceived by surveyors to be getting smaller in the first three months of 2015, compared with the last three months of 2014.

This perception fits in with a recent Bank of England survey, which found that banks and building societies became more willing to lend to people with deposits below 10% in the first quarter of this year.

Published: Thursday 16th April 2015 by The News Editor

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