Prices are now expected to rise by an average of 3.3% a year over the next five years, according to the latest UK housing survey by the Royal Institution of Chartered Surveyors (RICS), with both prices and sales predicted to rise over a three-month and 12-month period.
In August, 12% of surveyors experienced rising house prices compared to 5% in July, but RICS pointed out this remained the second weakest figure over the past 18 months, and is significantly lower than the high of 50% reported in February.
House prices in London continued to suffer for the sixth month in a row, as 30% more RICS members reported a fall in prices in the capital, compared to a price increase in most other parts of the UK.
Prices are expected rise on a national level over the next three months – the first time since April, as 10% more surveyors said they expected an increase over this period.
However, Andrew McPhillips, chief economist at Yorkshire Building Society, warned that there was still considerable uncertainty regarding the UK’s separation from the EU.
“Although these statistics, along with other favourable economic reports for August, paint a positive picture, they could also be seen as the beginning of the choppy market conditions we are likely to see in the medium term as a result of people’s uncertainty around how post-Brexit UK will look,” he said.
Although sales volumes stabilised during August, they continued to fall in some parts of the country, RICS said. But expectations for future sales showed significant improvement as surveyors’ sales projections for the next 12 months left negative territory across all areas of the UK.
Continued shortage of housing stock was a key factor in recovering housing prices, which is likely to continue as new instructions fell further in August. As a result, stock on estate agents books slipped for the third month in a row, edging closer to the record low posted in December last year.
McPhillips added: “Despite wider economic uncertainty, the main constraint in the housing market is the lack of supply, which will cause house price inflation to grow at a steeper rate in response to increasing levels of demand. In order to make properties more affordable, the UK needs to build more properties and remove other financial barriers for first-time buyers and those moving home in order to accommodate increasing levels of demand in the long term.”
