Residential property prices in the UK have continued rising in the month of November, as the housing shortage reached yet another peak, the Royal Institution of Chartered Surveyors (RICS) said today.
Significantly, the RICS noted that its latest survey predicts the biggest rise in sales in more than two years, following the planned changes announced in Chancellor Osborne’s autumn statement.
In addition to subsidising house builders and granting first-time buyers in London access to cheap credit, Osborne introduced an extra stamp duty surcharge for all second-home purchases and buy-to-let investments starting April. Experts have said that the extra tax will “turbo-charge” the housing market over the next four months, as investors scramble to buy more cheaply.
The RICS said that the higher demand, coupled with record-low supply, is more likely to contribute to price growth, rather than more construction.
"I can't recall a set of comments ... which have so frequently drawn attention to lack of stock on the market. Given this, it is hard not to envisage prices continuing to climb upwards," RICS economist Simon Rubinsohn said.
“It remains to be seen how successful the Government’s latest set of initiatives will be in driving up the rate of new-build. But with the best will in the world, it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline.”
Meanwhile, RICS reported that house prices in East Anglia and the East Midlands are rising at a faster pace than London. East Anglia was the strongest climber in November, with 67 percent of surveyed realtors reporting a growth in prices. The rally was led by the city of Cambridge, which has recorded higher house price growth since the recession than London, according to separate survey published last month.
In the East Midlands, 65 percent of respondents forecast that prices would continue rising, while in London the figure was just 17 percent.
Overall, prices are expected to rise throughout the UK, the report said, while the severe housing shortage has led to an “unrealistic” property market in certain towns and cities. Notably, the authors suggest that the bubble is likely to swell further, with a growing supply-demand imbalance and no indications that the Bank of England is planning to raise borrowing costs any time soon.
“Moreover, all the signals from the Bank still point to a very gradual upward trajectory for base rates when it eventually decides to move policy in this direction,” RICS said.