UK house prices to are set to increase an average of 6 per cent over the course of the year, according to the Royal Institution of Chartered Surveyors.
The organisation’s housing forecast for 2016 stated that East Anglia is continuing the trend seen in that region during 2015, with the highest predicted house price rise at 8 per cent.
Elsewhere, the North East is likely to see more modest price rises, with a predicted increase of 3 per cent for next year.
The strongest areas of the UK for transaction levels are likely to continue this year’s trend, with the North East, Wales, Scotland and Northern Ireland outpacing the rest of the UK.
Rics said that although housing has climbed the policy agenda, with supply issues dominating the private housing market, the likely increase in prices in 2016 will outstrip any rise in household income.
Simon Rubinsohn, Rics chief economist, explained that despite the raft of government initiatives announced over the past year, the lags involved in development mean that prices 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.
“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.”
He added that discouraging buy-to-let could see private rents take even more of the strain if institutional investment does not increase significantly, particularly given the likely reduced flows of social rent property going forward.
Jeremy Duncombe, director at the Legal and General Mortgage Club, agreed that a mixture of limited housing supply and growing demand will continue to push property prices well above inflation in 2016.
“If this trend continues, without a strong supply-side stimulus, many more aspiring homeowners will find themselves priced out of the market altogether.
“We welcome recent government commitment to build more affordable housing, which will work to ease pressure on the market. However, other sectors are set for a tough year,” he continued, noting that buy-to-let faces a “double whammy” of the 3 per cent increase in stamp duty and a reduction in tax relief.
“Negative measures like these will likely cause a rush in demand as prospective landlords rush to complete their transactions before the changes are implemented.”
ruth.gillbe@ft.com
