House prices in the UK will see an average increase of 3 per cent over the course of next year, according to the Royal Institution of Chartered Surveyors’ housing forecast for 2017.
It has also predicted that transactions are set to stabilise in line with recent trends.
Surveyors said the supply shortfall will continue to push prices higher with prices to increase by 3 per cent.
Meanwhile rents are likely to increase by 2 per cent or 3 per cent across the UK in 2017.
Simon Rubinsohn, Rics chief economist, said: “Although recent announcements by the government on housing are very welcome, the ongoing shortfall of stock across much of the sales and lettings markets is set to continue to underpin prices and rents.
“As a result, the affordability challenge will remain very much to the fore for many.
“Meanwhile the lack of existing inventory in the market is impacting the ability of households to move and will contribute toward transaction activity over the whole of 2017 being a little lower that in the year just ending.”
Rics stated the lack of a supply pipeline is at the forefront of the analysis and dominates the residential market.
While there is an improvement, it said the legacy of building on an insufficient scale has left the average inventory on estate agents books close to a historic low.
Rics predicted transaction activity would stabilise and was likely to come in between 1.15 million and 1.2 million, a little below the 1.25 million likely to be recorded for the whole of 2016.
Meanwhile prices in central London are predicted to stabilise after recent declines, with support provided by the weaker exchange rate encouraging foreign buyers.
damian.fantato@ft.com
