The Royal Institute of Chartered Surveyors (RICS) forecasts a 6% rise in house prices over the course of next year, stating that the likely rise in prices will outstrip any increase in household income.
Housing has become a focal point on the Government’s agenda of late, however the lag attached to the raft of initiatives announced over the past year will mean that house prices as well as rents, are likely to rise over the next twelve months, according to the RICS.
Simon Rubinsohn, Chief Economist, RICS, said:
“Although housing has climbed the policy agenda, with supply issues dominating the private housing market, our forecast suggests that the likely increase in prices in 2016 will outstrip any rise in household income.”
The RICS cites the lack of stock as the principle driver of this trend, saying that the likely persistence of cheap money will compound it for the time being.
Turning to new build, the institute believes that there is reason to take a more optimistic view, given the notable incentives to deliver starter homes. This, it feels, could help to slow the rate of growth to something closer to the likely rise in household incomes.
But the RICS’s main concern with the measures introduced by the government, is that they are overly focused on promoting home ownership at the expense of other tenures.
Simon Rubinsohn, added:
“Discouraging buy-to-let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward.”
Regional variations in the UK housing market are predicted to stay on trend, with East Anglia set to see an 8% rise in prices. The North East is forecast to experience more modest increases in 2016, with the RICS predicting a 3% rise in the region.
Transaction levels are expected to continue along the lines seen in 2015 too, with the North East, Wales, Scotland and Northern Ireland rising faster than the rest of the UK.
Jeremy Blackburn, Head of UK Policy, RICS, said:
“There have been many welcome supply side measures in the Productivity Plan to balance the likes of Help to Buy.
“The brownfield fund, local plan enforcement and new development corporations should help get more homes built, and the passage of the Housing & Planning Bill is key.
“We still, however, need to help councils, housing associations and community land trusts get building in order to get anywhere close to a coordinated and coherent strategy across all tenures.
“Ramping up housing supply is positive, but homeownership should not be the only game in town given the amount of private rented accommodation we need.
“A mix of market and rented housing is required and Starter Homes should not be seen as the panacea to solving the housing crisis but as forming part of a larger mix to meet the wide range of housing need the country is crying out for.”
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