First-time Buyers

House prices up as demand skyrockets

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Property prices are increasing across much of the UK as government schemes fuel soaring demand.

The Royal Institution of Chartered Surveyors’ (RICS) monthly survey has revealed that 57% of its surveyor members reported property price increases this October, the largest percentage since June 2002.

Activity in the housing market is picking up, with the average number of homes sold per chartered surveyor in the three months to October reaching 20.3, the highest number since February 2008.

Enquiries from aspiring new homebuyers outstripped instructions to sell property in every region of the country.

As a result, the pace of increase in demand for rented property is slowing down – only 11% of RICS members reported a rise in enquiries from potential tenants during October, the lowest reading in over ten years.

RICS members said that continuing low interest rates and the government’s Help to Buy schemes were combining to bolster demand from homebuyers, with the gap between supply and demand currently wider than it has been at any time since May 2009.

Simon Rubinsohn, RICS’s chief economist, said:

“It’s no secret the housing market is gathering some momentum and that buyer numbers are on the rise right across the country. A greater willingness by lenders to increase loan to values on mortgage products allied to the Help to Buy scheme has meant that more and more first-time buyers are in a position to enter the market.

“In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand and – in order for the market to function correctly – this imbalance urgently needs to be addressed,” he said.

In September this year, RICS suggested that the Bank of England should put a brake on house price increases, limiting rises to 5% per year.

The latest survey revealed that RICS members expect average UK house prices to increase by 3.5% over the next 12 months, a rate experts describe as ‘steady growth’.