House prices expected to rise by 25% in next five years

The Royal Institute of Chartered Surveyors (RICS) have revealed in their Residential Survey for October that property prices are set to increase 4.5% per annum over the next five years, making homes “even more unaffordable”.

The survey shows that house prices have continued to rise across all parts of the UK for the third month in a row. October saw 49% of chartered surveyors report an increase in house prices, in comparison to 44% in the previous month.

East Anglia has seen the fastest rise over the past three months, with 91% of chartered surveyors reporting seeing an increase rather than a fall in house prices.

In comparison, 25% more respondents saw prices rise in London over the past three months with only 5% more expecting to see an increase in property prices over the coming quarter. This represents the lowest reading in the UK in over this period but taking into consideration the full 12-month statistics, growth in London remains robust.

Since, February, the number of properties on the market has fallen every month. The demand from potential buyers also increased throughout the UK in October, with 12% more seeing a rise in enquiries from new buyers.

New instructions have decreased for the ninth consecutive month.

The rental market also continues to see demand outstripping supply, continuing a trend from 2009. Rental growth is expected to increase to an average of just under 5% per year over the next five years.

RICS Chief Economist, Simon Rubinsohn, commented: “It is hard to get away from the issue of supply when it comes to the current state of the housing market. The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month by month basis.

“If the five year projections from members regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward making the Government’s focus of boosting the delivery of new homes absolutely critical.”

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