Surveyors’ expectations that house prices are set to increase into the new year surged to their highest levels in more than 14 years in November.
The Royal Institution of Chartered Surveyors said that 59% more UK surveyors predict rises will increase rather than edge down over the next three months as the number of homes for would-be buyers to choose from continued to fall “well short” of demand.
Meanwhile, the proportion of surveyors predicting sales will pick up heading into 2014 reached a record level, with a net balance of 76% more surveyors expecting sales to increase, marking the highest reading in records going back to 1998.
Rics warned that without a “meaningful increase” in the supply of homes, both house prices and rents will become more unaffordable.
It said the reading for the number of surveyors predicting price rises rather than falls is the highest since September 1999 and demonstrates the impact that the recovery is having on an “anaemic supply” of properties for sale in the housing market. The report comes just days after the Office for Budget Responsibility warned that house prices could rise by more than £28,000 in some parts of the north and north-east. The body – which provides impartial economic advice to the UK Government – is predicting that prices will rise by 5.2% next year, and by a further 7.2% in 2015.
That would add £26,828 and £28,180 to the average property in Aberdeen and Aberdeenshire respectively.
It would also boost prices by nearly £20,000 in Inverness and the Highlands, almost £18,000 in Moray and upwards of £12,600 in the northern and Western Isles.
In what Rics said is a “sharp” pick-up, a balance of 58% more surveyors also reported already seeing house price growth last month. For the second month in a row, each region of the UK saw prices rise.
House sales have also lifted strongly compared with a year ago. An average of just over 20 homes per surveyor were sold in the three months to November, compared with around 15 during the same period last year.
But experts have said that stronger efforts must also be made to increase the number of homes on the market, with the mismatch between supply and demand putting an upward pressure on prices. Simon Rubinsohn, Rics chief economist, said: “It’s no secret that the housing market is on the way up and prices are surging ahead in many parts of the country.”
He continued: “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 a meaningful increase in new homes, the likelihood is that prices, and rents, will continue to push upwards, making the cost of shelter ever more unaffordable.”