The prices of UK houses have stabilized in September and the number of sales has increased. However, experts believe that the increased demand for houses and the lack of available homes will lead to an increase in house values over the next few months.
According to a recent report by the Royal Institution of Chartered Surveyors, only a small percentage of property valuers have found higher prices in September even though the overall number of sales has increased. As a matter of fact the number of sales has reached the highest level in the past 16 months. The report also indicates that the demand will continue to grow in the next months.
It is also worth mentioning that the number of respondents that have reported increase in prices has lowered in September compared to August. However, RICS claims that the increased sales were not followed by an increased number of properties available on the market. This is why experts predict that the prices of properties will rise in the near future.
Lack of available properties
Scotland, East Anglia and The North are the regions where sales have increased rapidly and it’s only in the East Midlands where sales have been more difficult and not followed these upward trends.
Simon Rubinsohn, one of the leading economists at RICS said, ‘Unless the stock being sold is replenished there is a limit to how sustainable this modest improvement in market turnover will prove to be. Unfortunately, the indications are that we are locked in a cycle where the lack of available properties on agents’ books is itself deterring some potential vendors from thinking about putting their own property on the market.
Demand and supply
According to RICS, 4 out of 10 respondents believed that the most important reason why there is a continuous shortage on this market is the absence of stock for sale. Another important reason is a prevailing feeling of economic uncertainty because it keeps back supplies. About 1 out of 10 respondents thinks that the stretched affordability is the main reason.
Since demand is much higher than the supply, the prices of houses will keep rising and RICS has confirmed that there has been a rise in all regions in the UK in the last two months. West Midlands, Northern Ireland and East Anglia are the regions where this difference between demand and supply was felt the most.
RICS doubles their house price increase forecast
Two months ago, RICS made changes in their forecast related to this year’s overall house price increase. They have actually doubled this forecast from 3% to 6%. This summer, the prices were about 8.5% higher compared to this period in 2014. The increased demand is also a result of more available credit and banks approving more mortgages.
Although no one can predict the future, it is reasonably clear that house prices will continue to increase if all other factors remain the same.