Expectations for house price growth continues to rise

EXPECTATIONS for future house price growth hit an 11-year high across Yorkshire and the Humber during November as the amount of homes coming onto the nation’s market, once again, fell well short of rapidly rising buyer demand.

Sixty per cent more chartered surveyors across the region predict prices will continue their upward trend rather than fall back over the coming three months.

This is the highest reading since July 2002, and demonstrates the impact that the recovery in demand allied with anaemic supply is having on the housing market.

Nationally, expectations hit a 14-year high, with a net balance of 59% of chartered surveyors predicting prices will continue to rise – the highest reading since September 1999.

Meanwhile, last month saw price increases continue, albeit at a slightly reduced rate, with a net balance of 35% more respondents reported price growth, down slightly from +40 in October.

Across the UK, a net balance of 58% saw house prices increase. While there are still some areas of the UK that are struggling, it appears that, on the whole, the regional markets are now responding to the incentives provided by the government and better economic news.

Although a lack of stock on the market remains a big challenge, the number of property transactions is continuing to rise. During the three months to November, the average number of homes sold per chartered surveyor in Yorkshire & the Humber hit 21, up from 17 in the same period last year.

Nationally, the average number of homes sold per chartered surveyor was 20.6, up from 15.9 in November 2012.

However, demand continued to outstrip supply, with far more people looking to buy than available houses coming onto the market. During November, the survey found a net balance of 58 new buyer enquiries, against a net balance of 31 new instructions to sell. On a national level, a net balance of 62% of chartered surveyors reported demand from new buyers, against only 3% seeing new stock coming onto the market.

Looking ahead, with the economic recovery gaining some traction right across the UK, predictions for the rate of increase in future transaction levels nationwide hit a record level. A net balance of 75% of surveyors in Yorkshire & the Humber expect sales levels to increase as we head into the New Year, compared to 76% across the UK as a whole.

Aisling Ramshaw, partner at Citu Developments, said: “While demand is clearly positive and rising, with the outlook for house prices at its best since July 2002, we should be cautious that the market doesn’t get overheated.

“There is still a huge imbalance between the number of people wanting to buy and the amount of new properties coming on to the market, which is having the effect of pushing prices up. It’s debatable how sustainable this might be over the long term.

“Measures like the Government’s £1bn loan to get stalled housing projects underway will go some way to helping ease supply, but RICS continues to believe that more must be done to stimulate housebuilding if the UK is to see a balanced and sustainable recovery across all regions.” 

Simon Rubinsohn, chief economist at RICS, added: “It’s no secret that the housing market is on the way up and prices are surging ahead in many parts of the country. The Bank of England’s recent decision to withdraw the Funding for Lending scheme – which allows banks to borrow more cheaply and pass the benefits on to mortgage applicants – could well have some impact on the number of people able to purchase a home. Although the improvement in wholesale and retail funding markets may mean the impact on mortgages is relatively limited.

“One thing we are very concerned about, however, is the lack of both new and existing homes coming on to the market. As the Chancellor pointed out last week, housebuilding is on the up, but it is rising nowhere near quickly enough to make up the shortfall that has built up in recent years. If there is not meaningful increase in new homes, the likelihood is that prices, and for that matter rents, will continue to push upwards making the cost of shelter ever more unaffordable.”