Property will become “even more unaffordable” over the next five years creating a critical need for a house building programme, surveyors say.
Property prices and the cost of renting a home will continue to rise owing to a shortage of supply, a survey by the Royal Institution of Chartered Surveyors (Rics) found.
It said prices had risen for the last three months in all parts of the UK.
The number of homes put on the market has fallen every month since February.
“The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month by month basis,” said Simon Rubinsohn, chief economist at Rics.
“If the five-year projections from members regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward making the government’s focus of boosting the delivery of new homes absolutely critical.”
This will range from a 21.6% rise in the South East of England to a 12% rise in the North East of England, the estate agent claims.
The pace of rises in interest rates would dictate the pace, distribution and sustainability of house price growth, it said.
House price surveys explained
Various surveys record UK house prices on a monthly basis, but they all have slightly different methodology.
The house price index by the Nationwide Building Society is the quickest to be released. It uses an average value for properties after considering components such as location and size. The survey is based on its own mortgage lending which represents about 13% of the market.
A survey by the Halifax, now part of Lloyds Banking Group, is published a few days later. Lloyds is the biggest mortgage lender in the UK with 20% of the market and, like the Nationwide, uses its own home loan data.
Figures from the Land Registry are widely considered to be the most robust but are published much later than the lenders’ data. It calculates the price change for properties that have sold multiple times since 1995. This survey only covers England and Wales.
A survey of house prices in Scotland is published by the Registers of Scotland, using a simple average of house prices. The Land and Property Servicesassisted by the Northern Ireland Statistics and Research Agency produces a quarterly house price index in Northern Ireland.
The official UK statistical authority – the Office for National Statistics – is another well-regarded survey, used for reference by government. It offers a UK-wide regional breakdown. It draws on data from the regulated mortgage survey by the Council of Mortgage Lenders, so excludes cash buyers of property.
Housing market sentiment is reflected in the Royal Institution of Chartered Surveyors (Rics) survey of some of its members.
Various other publications include a Hometrack index of house prices in UK cities, and a Rightmove survey of asking prices.