12th November 2015
The affordability of UK housing is set to get even worse over the next five years as house prices are forecast to rise by 25% over the period.
The Royal Institution of Chartered Surveyors October survey reveals that valuers believe prices will rise by 4.5% per year between now and 2020
It also shows that house prices have risen across all parts of the UK for the third consecutive month.
As prices rise in all areas of the UK, East Anglia has consistently seen the fastest rises over the last three months.
Contributing to the rise in prices across the country, demand from potential buyers grew across the UK in October.
Demand continues to considerably outpace supply and the number of new instructions has decreased for the ninth month in succession.
The supply of new stock to the UK market has been in decline since the middle of 2014, with the number of new instructions only increasing in one of these months.
Despite the lack of new stock to the market, sales activity is relatively healthy, according to RICS, and following a small pick-up in agreed sales in September, activity was little changed this month across the UK.
This chimes with HMRC transactions data, which continues to see the number of sales rising consistently over the year.
In the UK lettings market, demand is also continuing to outpace supply in the three months to October.
This has been the trend nationally for some time, with the growth in demand outstripping that of supply since 2009.
Unsurprisingly, rental expectations remain strong and respondents continue to expect rents to rise over the year ahead.
Rental growth is anticipated to accelerate to an average of just under 5% per year over the coming five years.
RICS chief economist Simon Rubinsohn says: “It is hard to get away from the issue of supply when it comes to the current state of the housing market. 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.
“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.”