House prices to rise by 3% in 2015 and rents by 2% says RICS

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House prices in the UK will see an average increase of 3% in 2015 bolstered by recent changes to Stamp Duty, continuing demand and lack of supply of property, it is predicted. Rents are set to grow by 2% and sales are expected to increase, according to the annual housing market forecast from the Royal Institution of Chartered Surveyors (RICS). Across the UK, RICS expect all parts of the country to see modest price rises during 2015 with the South West, Wales and London set to experience the lowest rises with prices increasing by 2% and 0% respectively. Having outperformed in the early stages of the recovery, chartered surveyors reported London's housing market was 'pausing for breath' both in terms of pricing and activity towards the end of 2014. This does however mask significantly different behaviour across different parts of the capital and is reflected in the RICS forecast with the eastern boroughs and some other non-prime areas still likely to see more buoyant market conditions persist through 2015. The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the Help to Buy scheme, the report says. However, enquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result RICS expects rents to continue pushing upwards over the next 12 months. Chartered surveyors are suggesting that the strongest rises are likely to be recorded in the South West and the North East of England. Rents in the capital are likely to rise broadly in line with the national average. The number of sales transactions should see a further increase during 2015, moving up to 1.25 million from 1.22 million in 2014. Although there are some concerns about mortgage availability in the wake of the Mortgage Market Review, a firm economy and stamp duty reform should underpin activity levels. The report points out that although this figure represents an improvement on the past few years, to put this in context, in 2006 total transactions stood well above at 1.67 million. Lack of supply to the housing market remains a running trend, and one that cannot be addressed fast enough. However, there are increasing levels of house building projects underway, and as a result, RICS forecast housing starts to rise to 155,000 in England during the year. This is compared to 125,000 in 2013 and only around 100,000 in 2012. 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. The number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next 12 months, particularly as around 90% of new loans… Continue reading →

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