House price inflation to reach 6% this year

The Royal Institute of Chartered Surveyors (RICS) is predicting that house prices will end 2015 6% higher.

The predicted growth for this year was originally only 3% but the group of surveyors has now revised its forecast given rising buyer demand and the shortage of housing available.

The strongest growth is predicted in Northern Ireland, with prices expected to rise by 11% throughout 2015.

The favourable mortgage rates, supported by government backed schemes such as ‘Help to Buy’, have helped to increase demand in the housing market while the number of home coming onto the market is at its lowest levels in over 30 years.

Nationally, new buyer enquiries rose for a fifth successive month, with 22% of respondents reporting a rise in demand, led by significant improvements in the West Midlands, Wales and the North West. The lack of new instructions, however, means stock levels are at a record low.

Michael Hanley, RICS Economist said: “While the UK housing market has seen some substantial volatility in demand over the last 18-months, the most consistent feature has been a distinct shortage of new instructions.

“With respondents reporting another fall in appraisals during August, and looking at general market conditions, we have no reason to believe this will change in the near term.

“Therefore, despite the fact that demand has been picking up in recent months, we have lowered our forecast for transactions for 2015 from 1.25 million to 1.2 million. Alongside this, we have revised our expectations for price gains this year up to 6%.”

RICS Chief Economist,Simon Rubinsohn, said: “Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace. As such, house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014.

“This trend looks like it will continue into next year, however uncomfortable that may be for those looking to enter the market; so many of our members are telling us that they are struggling to replace the stock they have sold.”

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