Property prices in the UK are expected to increase by 25% in the next five years and become even more unaffordable due to a huge shortage of houses for sale, a leading organisation has cautioned.
The Royal Institution of Chartered Surveyors (RICS) revealed that the supply of properties for sale, measured by the average number on a chartered surveyor estate agent’s books, has dropped to the lowest level since records began in January 1978.
Furthermore, the anticipated post-general election supply boom has failed to emerge, with the North West and London experiencing the sharpest fall in instructions compared to April.
The average stock of properties per surveyor is now 52, down by around 12% since the start of the year. Meanwhile, new buyer inquiries rose at their fastest rate in over a year. As a
consequence, house prices increased further in May at a quicker pace than in April, found RICS.
Economists have indicated that prices will rise again now that the Conservative Government is in power. Earlier this month, Chief Economist at F&C Investments, Steven Bell, said boom conditions have returned to the market.
Last week, Halifax’s Housing Economist, Martin Ellis, warned that housing supply “remains extremely tight.”
He continued: “The imbalance between supply and demand is likely to continue to push up house prices over the coming months.”1
The Halifax and Nationwide both found the average house price to be £195,000-£196,000.
Chief Economist at RICS, Simon Rubinsohn, says: “There has been some hope that the removal of political uncertainty would encourage more properties onto the market, but the initial indications are that this is not proving to be the case.
“As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher, with property set to become ever more unaffordable.”
He adds that feedback from RICS members “points to prices at a headline level rising by another 25% over the next five years.”1
He says that this suggests there is no real confidence amongst members that the Government will deliver effective measures to boost new supply.
The chartered surveyor, Frost Partnership in Ashford, Surrey, told RICS: “Listings are in very short supply, which is pushing up asking prices to unrealistic levels in some cases.”1
However, Christopher Green of Curzon Land in central London, which specialises in prime property investments, was pleased with the election result, telling RICS: “The market has gained an immense amount of optimism now that the socialist spectre has been removed for the next five years.”1
But tenants are also receiving some bad news – RICS members are also forecasting rent rises averaging around 3% in the next 12 months. The group says this reflects the fact that demand for rental accommodation is continuing to grow.
“Contributors [to the study] anticipate that rents will rise across all parts of the UK over the next three months, with expectations most elevated in the East Midlands and the South West,”1 RICS concludes.