The Royal Institution of Chartered Surveyors (RICS) is predicting price increases in the UK housing market of 8% in 2014 due to the shortage of homes coming onto the market.
RICS said prices would rise across the UK with London set for another 11% jump on top of the double-digit increases recorded over the past year. It also said that the cost of renting a home would rise by 2%.
These predictions come as mortgage lenders report that the value of home loans advanced to lenders in November was up by 30% on the same period last year which is yet another sign of the improving situation in the market.
The Council of Mortgage Lenders (CML) said an estimated £17 billion of gross mortgage lending was done during November, which is up by almost a third on November 2012’s total of £13 billion.
The increase in lending has not been matched by the supply of properties for sale, which has been one of the key criticisms of the government’s policies to kick-start the housing market.
Based on feedback from members, RICS said the imbalance between supply and demand was the key challenge facing the market. It is forecasting that transactions will increase to 1.2 million next year from the estimated 1.05 million seen in 2013 – still a long way shy of the 1.67 million achieved in 2006.
It warned that an expected 20% increase in the number of new homes started over the next year to 155,000 from 125,000 this year, while an “encouraging trend”, was still insufficient to address the more rapid growth in population and would leave shortfalls for both rental properties and homes for sale – driving price increases.