My newspaper this morning predicted that house prices could rise by as much as 25% over the next five years following a Royal Institute of Chartered Surveyors (RICS) report. The report shows that the number of homes for sale has fallen to its lowest level since records began in 1978.
It is suggested that this shortage of supply comes as a consequence of people living longer and moving house less frequently. Low cost mortgages are also a factor where people have taken advantage of the cheapest ever interest rates and locked into a long term deal rather than moving home.
This reduction in available properties is puzzling as the General Election result was expected to provide a much needed boost in confidence and a consequential increase in the activity levels. Instead, whilst sales and rentals have been active, properties which have been sold or let have not been replaced by new properties coming to the market and, as a consequence, we have seen prices rising in all of the most popular residential districts locally.
RICS has also predicted that people’s lifestyles may be changing. One particular new trend is that parents, conscious of the difficulties facing young people getting onto the property ladder, rather than move, have chosen to release some equity from their property to help their offspring. Alternatively they are purchasing a Buy to Let property.
For our part, the declining number of available properties is also a direct result of a shortage of housing in our country and the problems related to the lack of new building over the last twenty years. These factors are now coming home to roost. Not only is there pressure on house prices but there is also pressure on rent levels with properties being let often within a matter of hours of becoming available and at ever increasing rent levels.
All of our towns and villages face pressures of development with nobody enjoying the prospect of green belt encroachment. Unfortunately however, without some selective relaxation, the onward increase in house prices and rent levels is inevitable.
John Halman is Managing Director of Gascoigne Halman, an estate agent with eighteen offices in South Manchester and is the North West Regional Residential Spokesman for the Royal Institution of Chartered Surveyors.