Lack of stock will continue to drive next year’s market, RICS warns

Lack of stock will remain the key driver of the UK housing market, the RICS has said.

The organisation is forecasting an average 6% rise in prices, with a “modest” rise in sales activity.

It says that next year’s rise in house prices will outstrip any increase in household incomes.

The RICS said: “One theme has dominated the private housing market this year – the dramatic fall in inventory on the books of estate agents.”

The RICS is forecasting the greatest price rises to be in East Anglia next year at 8%, followed by the south-east and west midlands at 7%.

It predicts 6% rises in the north-west, Wales and Yorkshire & Humberside; 5% rises in London, Northern Ireland and the south-west; 4% rises in the east midlands and Scotland; and a 3% increase in the north-east.

Simon Rubinsohn, RICS chief economist, said: “Housing has clearly leapt up the Government’s agenda, but despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months.

“Lack of stock will continue to be the principal driver of this trend, but the likely persistence of cheap money will compound it for the time being.

“Critically our principal concern with the measures announced by the Government is that they are overly focused on promoting home ownership at the expense of other tenures.

“Discouraging buy-to-let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property.”

In a separate forecast, Peter Rollings, of Marsh & Parsons, has predicted a 3% rise for house prices in prime central London, but 5% on the fringes of the capital.

Marsh & Parsons says that sales of expensive property have been “severely tempered” by last year’s Stamp Duty reforms, with a top rate of 12% now in place.

Sales of properties above £937,000 – the threshold at which higher Stamp Duty charges apply – have fallen sharply.

The firm is warning that next year, sellers of dearer homes will have to adjust their price expectations.

Rollings said: “The Stamp Duty changes have certainly dulled the London housing market, and while 2016 will see a return to growth it will be rather lack-lustre.”

However, Rollings expects continuing high demand to outstrip supply and says that for the broader marker, the only way for London house prices is up.


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