House prices 'set to rise by 8%'

'House Prices Falling! Concepts, Home on a White Background with Declining Bar Graph made of Quarters. Currency, Coins, Selectiv

%VIRTUAL-SkimlinksPromo%House prices will rise by another 8% next year due to the shortage of homes coming on to the market , surveyors have forecast.

The Royal Institution of Chartered Surveyors (RICS) said all parts of the country would see prices rise, with London set for another 11% jump on top of already sizeable gains over the last year.
Based on its recent feedback, RICS said the demand-supply imbalance was the key challenge facing the residential market.

It believes the number of transactions will improve to 1.2 million next year from the estimated 1.05 million this year, although this is still a long way short of the 1.67 million sales seen in 2006.

And it warned a rise in construction starts to 155,000 from 125,000 this year will be insufficient to address the more rapid growth in population.

RICS director Peter Bolton King said: "We expect all areas of the country to see prices increase, with London, predictably, recording the biggest rises.

"The improving economic picture aside, this is largely down to the fact that buyer numbers considerably outweigh the amount of homes on the market.

"While the number of new homes being built is now on the rise, it still won't be anywhere near enough to meet demand and we expect the problem of insufficient housing stock to be the main driver behind price increases over the next 12 months."

In his autumn statement, Chancellor George Osborne announced £1 billion of loans to unblock large housing developments, including in Manchester and Leeds, and raising a borrowing limit for councils to fund new homes.

RICS said house prices rose 5% in 2013, aided by a string of Government schemes such as Help to Buy and Funding for Lending, which widened mortgage availability and fuelled demand from buyers.

A new phase of the Government's flagship Help to Buy scheme was launched in October to give more people with low deposits a helping hand on to or up the housing ladder.

But fears have been raised that the upward pressure on house prices could lead to a ''bubble'', with borrowers over-stretching themselves after a long period of ultra-low interest rates.

According to RICS, regional prices will rise by the following percentages in 2014:

:: East of England 10;
:: East Midlands 10;
:: London 11:
:: North East 5;
:: Northern Ireland 4;
:: North West 7;
:: Scotland 7;
:: South East 7;
:: South West 7;
:: Wales 7;
:: West Midlands 7;
:: Yorkshire and Humberside 7.

See the latest mortgage rates and get expert advice

The people who affect house prices
See Gallery
House prices 'set to rise by 8%'

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.


Read Full Story