House prices to rise by 8% in 2014, says RICS

Saturday, 21 December 2013 11:41

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The Royal Institution of Chartered Surveyors (RICS) believes UK house prices will rise by an average of eight per cent in 2014, due in part to a lack of supply of properties for sale.

RICS said the imbalance between supply and demand remains the biggest obstacle facing the residential property market.  

It said the number of houses being built is "insufficient to address the more rapid growth in population."

The housing market has ended the year growing quickly, with mortgage lending up 30 per cent in November and total borrowing for the year ahead of expectations.

The organisation said the acute lack of new houses coming onto the market for sale will not meet the growing demand generated by government schemes to help boost the property market such as the Help to Buy scheme.

RICS said all parts of the country could see price increases but it will be London at 11 per cent that gains the most.  

RICS said the number of properties brought and sold will rise again in 2014, as it did in 2013, up from an estimated 1.05 million this year to 1.2 million next year. This would still be only around 75 per cent of the amount of property transactions seen at the top of the market in 2006, of 1.67 million.

It confirmed property prices have gone up by five per cent in 2013, helped by the Help to Buy and Funding for Lending Scheme (FLS), which has now been withdrawn from the residential market.

Together the schemes helped boost demand and increase the range of mortgages available and helped increase competition in the market to push down rates and fees.

This has fuelled concerns that government policy and low interest rates could combine to fuel a house price bubble.

This has led the Bank of England to introduce an annual review from the Financial Policy Committee (FPC) to guard against an unsustainable rise in house prices.

Peter Bolton King, director of RICS said: "We expect all areas of the country to see prices increase, with London, predictably, recording the biggest rises.

“The improving economic picture aside, this is largely down to the fact that buyer numbers considerably outweigh the amount of homes on the market.

“While the number of new homes being built is now on the rise, it still won't be anywhere near enough to meet demand and we expect the problem of insufficient housing stock to be the main driver behind price increases over the next 12 months.”

The problem is illustrated by the number of new homes being built by the UKs biggest builders. The combined planned new build numbers is expected to grow from 125,000 in 2013 to 155,000 next year. The big house building firms Barratt, Berkeley, Persimmon, and Taylor Wimpey have been criticised by Labour leader Ed Miliband who has promised a commission to look into the issue and has pledged to build 200,000 homes a year in England by 2020 if Labour is in government.

 

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