The latest figures from the Royal Institute of Chartered Surveyors (RICS) have drawn attention to ‘soaring demand’ for new homes, and the Institute has called for urgent action to address the imbalance between supply and demand in order to avoid another property bubble.
In October, RICS’s seasonally adjusted House Price Balance hit +57, signifying that a 57% majority of chartered surveyors reported an increase in UK house prices. The last time the number of surveyors reporting rises outnumbered the number reporting static or shrinking prices by such a large margin was in June 2002 – over 11 years ago.
The monthly RICS members’ survey records the opinions of 300 chartered surveyors across the UK.
The Help to Buy mortgage guarantee scheme was one factor cited in the RICS commentary as one reason for the rapidly climbing prices, though the shortage in homes being put up for sale seemed a greater concern. The Chief Economist at RICS, Simon Rubinsohn, said:
“The amount of homes currently up for sale is still nowhere near enough to keep up with demand. In order for the market to function correctly, this imbalance urgently needs to be addressed.”
The easy access to high LTV mortgages facilitated by the government scheme has augmented this demand, RICS argued, causing asking prices to accelerate more quickly. The Land Registry recently reported that the average selling price in September was £167,063 – still some 8.8% lower than the last peak in November 2007 – though the figures for October (when Help to Buy began) are not yet available, and so the impact of Help to Buy cannot yet be analysed.
However, September’s figures represented a monthly rise of 1.5%, the highest since January 2010, and the RICS survey suggests that October’s will be likely higher still.