House prices: will demand continue to outstrip supply?
UK surveyors predict price rises of close to five per cent a year for the next five years
In the ongoing debate on how house prices will evolve over the next few years, the Royal Institute for Chartered Surveyors (Rics) has expressed concerns over the affordability of UK property.
The results of Rics's latest monthly survey found that its members were predicting overall rises of around 4.5 per cent a year for the next five years, an increase that will add around £42,000 to the average cost of a home in England and Wales, according to The Guardian. With wages for most workers currently rising by around 2.5 per cent, property is only becoming more expensive while saving for a deposit is only getting harder.
Rics found evidence that the shortage of housing that's now endemic in the property market is continuing. "The supply of properties coming on to the market fell for a ninth month running in October," it noted, with 10 per cent more members seeing a rise in new instructions than a fall. "At the same time, inquiries from would-be buyers rose."
"It is hard to get away from the issue of supply when it comes to the current state of the housing market," said Rics's chief economist, Simon Rubinsohn. "The legacy of the drop in new build, following the onset of the global financial crisis, is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month-by-month basis."
Estate agents in East Anglia were most likely to report price rises, with 91 per cent more surveyors reporting an increase than a fall. The area joins the southeast and London as a region where a majority of surveyors report that current prices are "expensive", the Financial Times notes.
In London only a slim majority of surveyors expect prices in what is already the most expensive market in the UK – and according to UBS the most overpriced in the world (see below) – to increase in the coming months. The FT says this reflects a slowdown at the top of the market, where stamp duty changes are hitting the sale of properties worth more than £1.5m.
The overall property price increase in the capital is instead being "driven by cheaper London boroughs such as Harrow and Newham".