House prices to stay on upward spiral

HOUSE prices in the UK will see an increase of eight per cent over the course of next year, while the cost of renting a home should rise by a further two per cent, predicts the annual housing forecast from the Royal Institution of Chartered Surveyors (RICS).

The growth is being driven by an acute imbalance between buyer demand and sluggish supply, with new instructions to estate agents close to stagnating.

The report points out that although significant challenges remain to achieving a sustainable economic recovery, 2014 may well see the pick-up in activity gather pace and this will be reflected in the housing market.

In addition to rising prices, the number of transactions should also see an increase, moving up from 1.05 million in 2013 to 1.2 million in 2014.

But RICS says that although this represents an improvement, to put this in context, total sales in 2006 were well above this at 1.67 million.

With a shortage of homes coming on to the market a key factor behind the price rises, some comfort may be drawn from a likely 20 per cent jump in new build starts in England over the next year.

That would push the total towards the 155,000 mark compared to 125,000 this year and only around 100,000 in 2012.

But the RICS report says that while this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures.

Across the UK, all parts of the country should see prices rise next year – but predictably the biggest increases will be seen in London where the cost of a home will jump by around 11 per cent.

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