Lack of supply driving up house prices

New investigations suggest that despite mortgage activity increasing over the last twelve months, the lack of property for sale is likely to drive up house prices.

A report from The Centre for Economics and Business Research (CEBR) predicts that house prices will increase by 5.6% this year, higher than its previous forecast of 4.7%.

Deals

This comes despite a 14% rise in mortgage approvals for house purchases, according to the major banks. The British Bannkers’ Association noted that the rise in September in comparison to the same period last year was partly down to first-time buyers being able to find a more suitable deal.

With this said, the 44,489 mortgage approvals for house purchases in September was actually 4.5 % down on August.

Lack of supply driving up house prices

The CEBR said that price gaps between different property types are making it more difficult for people to first get on to and then climb up the property ladder.

In London, someone who wished to move from a flat to a terraced property would have to find an extra £176,000, according to the report. The CEBR has called on the Government to expand its current housebuilding programme, claiming that prices would continue to rise-by 3.5% in 2016 and by 4% in the next four years.

Housing charity Shelter has also warned that more house price rises will, ‘push the goal posts even further away for those hoping to become homeowners.’[1]

[1] http://www.bbc.co.uk/news/business-34636836