House price growth predicted to continue

HOUSE prices in the region will grow by 6% over the course of next year, according to the RICS (Royal Institution of Chartered Surveyors) housing forecast for 2016.

With house prices predicted to rise by 6% on average across the whole of the UK in 2016, East Anglia will be the star performer,  continuing a trend seen this year 2015 with the highest predicted rise at 8%.  Meanwhile, the North East is likely to see more modest price rises with RICS’ predicted increase for 2016 at 3%.  

RICS also predict that the strongest areas of the UK for transaction levels (sales) are likely to continue trends seen in 2015, with the North East, Wales, Scotland and Northern Ireland outpacing the rest of the UK.

Although housing has climbed the policy agenda, with supply issues dominating the private housing market, the RICS forecast suggests that the likely increase in prices in 2016 will outstrip any rise in household income.

RICS North West residential spokesperson, John Halman of Gascoigne Halman estate agents in Wilmslow said: “For many years we have seen the housing market lurch from rapid increases in value to falling values in a ‘boom – bust’ cycle. However, the current signals would seem to point to a calmer picture with gently rising values over the next few years.”

He expects market conditions to remain favourable with interest rates at their record low of 0.5% for the foreseeable future.

“The major issue is one of supply and demand – there aren’t enough houses being built.”

Simon Rubinsohn, RICS chief economist, added “Housing has clearly leapt up the government’s agenda but despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months.

“Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being.

“Looking further out, there is some justification for taking a more optimistic view of new build with significant incentives being put in place to deliver starter homes. While this may not on its own, stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes.

“Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures.

“Discouraging Buy to Let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward.”