RICS forecasts no let up in rising house prices
The latest residential market survey from RICS has provided another warning shot about the inflationary pressure on prices, born out of a continued shortage of properties, forecasting a 6% rise in prices this year.
The organisations said its price indicator reached a 15-month high last month, with a net balance of 53% more respondents reporting price rises, and “firm growth” being seen across all areas of the UK.
In further analysis, using Office for National Statistics’ data as the comparator, RICS said the findings indicate that prices “now look likely” to 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.
RICS’ expectations on prices, both in the near-term and medium-term, reflect the imbalance between supply and demand, with 37% more of its members expecting prices to continue rising over the next three months, and 76% over the coming year.
Meanwhile, new buyer enquiries increased for a fifth month in succession, RICS said, with 22% of survey 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 Michael Hanley, RICS economist. “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.”
Simon Rubinsohn, RICS’ chief economist, added: “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.
“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.”
Responding to RICS latest survey, Andy Sommerville, director of Search Acumen, said: “Agreed sales are chugging away according to the latest RICS data, but speculation around property price hikes is a reminder of the stark gap between pent-up buyer demand and availability of housing stock.
“House prices are showing no signs of abating, and the glaring supply shortage desperately needs to be addressed. The reported rise in tenant demand over and above landlord instructions shows the private rental sector is also suffering a squeeze on capacity. The government’s promise of more brownfield development and extra homes is a step in the right direction, but the pledge to deliver 275,000 extra houses by 2020 won’t come close to closing the gap.
“For now, rising prices have not dampened interest or buyer enquiries, which means conveyancers can expect fierce competition in the market for the remainder of the year. It looks like being a busy end to the year, so it’s vital that business systems and processes are set up to deliver a quality service offering that exceeds expectations.”