Acceleration in national house price growth in the UK is being reinforced by the continued imbalance between falling new instructions to sell and rising buyer demand, according to the latest market report.
The August 2015 residential market survey report from the Royal Institution of Chartered Surveyors (RICS) says that the shortage of housing stock is driving prices higher and the organisation now predicts that house prices are set to rise by 6% in 2015.
The RICS price indicator reached a 15 month high in August, with a net balance of 53% more respondents reporting price-rises, and firm growth being seen across all areas of the UK.
Further analysis, using Office for National Statistics’ data as the comparator, indicates that prices now look likely to rise in the region of 6% over the course of 2015, compared with 3% predicted at the beginning of the year. The strongest price growth is forecast in Northern Ireland, where prices are now anticipated to rise by 11% throughout 2015.
Both near and medium term price expectations series from the survey are reflective of the imbalance between demand and supply. Some 37% more members are expecting prices to continue to rise over the next three months and 76% over the coming year.
Meanwhile the agreed sales balance edged upwards for the fourth successive month but a more robust recovery in activity is continuing to be held back in part by the lack of stock on the market.
The data also shows that new buyer enquiries increased for a fifth month in succession, with 22% of respondents reporting a rise in demand, led by significant improvements in the West Midlands, Wales and the North West.
New instructions, however, have yet to record any meaningful upturn since the middle of 2013, pushing average stock levels to record lows.
‘While the UK housing market has seen some substantial volatility in demand over the last 18 months, the most consistent feature has been a distinct shortage of new instructions,’ said RICS economist Michael Hanley.
‘With respondents reporting another fall in appraisals during August, and looking at general market conditions, we have no reason to believe this will change in the near term. Therefore, despite the fact that demand has been picking up in recent months, we have lowered our forecast for transactions for 2015 from 1.25 million to 1.2 million. Alongside this, we have revised our expectations for price gains this year up to 6%,’ he explained.
When it come to the lettings market the report reveals that tenant demand rose at a steady pace for the eighth successive month, outstripping the modest pick-up in new landlord instructions.
Accordingly, rents are expected to increase in the near term, with 34% of respondents predicting a rise in rents during the next three months.
‘Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace. As such, house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014,’ said Simon Rubinsohn, RICS chief economist.
‘This trend looks like it will continue into next year, however uncomfortable that may be for those looking to enter the market; so many of our members are telling us that they are struggling to replace the stock they have sold,’ he added.
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Source: Property News Spain