Prices predicted to rise in capital by 30%
London may be the only UK region where house prices are falling, but surveyors reckon it will see 30% price rises over the next five years.
A new survey of the residential property market from the Royal Institute of Chartered Surveyors (RICS) has revealed that London is the only region in the UK where prices are reported to have fallen rather than risen in the past three months.
Prices in London have been falling now for six consecutive months, according to RICS. However, this trend is not expected to last. Only 28% of surveyors are now reporting falling prices in the capital, compared to 46% in January. RICS is predicting that house prices in the city will rise by a further 30% over the next five years.
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A quiet market
RICS says that the number of houses on the market is down in general, and that the market itself is rather quiet. Anecdotal evidence suggests that the lack of properties up for sale is at least partially due to the upcoming general election, and on the other side of the market the potential of a ‘mansion tax’ being implemented post-election has also been suggested as a reason behind buyer reticence.
This short-term slowdown "highlights the extent of the challenge policy makers will face in addressing the housing crisis in the aftermath of the coming general election,” said Simon Rubinsohn, RICS Chief Economist.
The relatively muted activity in the housing market has not, however, stopped the rise of house prices throughout the country bar London in February.
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Housing shortage
The main thing fuelling the house price growth the UK is experiencing is the shortage of houses on the market. An increase in new-build completions would help to ease the pressure, but housebuilding is time consuming and there will always be a significant delay between project starts and completions. No one can expect a ‘quick fix’ to the problem.
The number of new builds being started in 2014 was at its highest since 2007-8, which is encouraging. However provisional Government figures show that only 33,870 houses were completed in the first quarter of 2014, whereas in the early 2000s between 40,000 and 50,000 were being completed every quarter.
Housing charity Shelter has said that the country needs 250,000 homes built per year to keep up with the demands of a growing population. A failure to reach that figure, it warns, would mean that the cost of buying a house and of renting will keep on rising, causing further unrest in an already turbulent housing market.
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