House prices could rocket even faster than previously forecast, as research reveals that accelerating demand for homes is coming up against a brick wall of scant supply.
Prices are set to climb six per cent this year, the Royal Institution of Chartered Surveyors (RICS) said today, doubling the estimate it made at the start of 2015 and adding fuel to fears that the UK could be facing yet another house price boom after price growth hit double-digits in 2014.
Sky-high consumer confidence, near-record employment and all-time low mortgage rates are stimulating intense demand, putting upward pressure on the nation’s property values. A shortage of properties coming on to the market is only making things worse.
“The nationwide mismatch between sellers putting homes up for sale and buyer demand should warm up measures of growth for the autumn,” said Adrian Gill, director of Reeds Rains and Your Move estate agents.
“There is good reason for this trend to be sustained into next year, however uncomfortable that may be for those looking to enter the market, given that so many of our members are telling us that they are struggling to replace the stock they have sold,” said Simon Rubinsohn, RICS’ chief economist.
National buyer enquiries have climbed for a fifth consecutive month, the RICS said.
Record low borrowing costs, the combination of low Bank of England policy rates and fierce competition between banks, has led lending for house purchases to an 18-month high, according to figures published this morning by E.surv, another property surveyor.
August saw 69,220 house purchase approvals, 9.3 per cent more than last year. The average interest rate on a fixed mortgage edged down to 2.83 per cent in the three months to June, the Bank of England said earlier this week, the lowest since the series began seven years ago.
Prospects of an imminent revival in supply have been dampened as 39 per cent of surveyors said they had been asked to value fewer properties in August against 27 per cent who said they had gone up.