House prices 'set to remain upward'

Messenger Newspapers: More homes were sold per surveyor during the period, marking the highest figure seen since February 2008 More homes were sold per surveyor during the period, marking the highest figure seen since February 2008

House sales have lifted to their strongest levels in six years as expectations that property prices are set to lift higher broaden out across the country, surveyors have reported.

But there are also signs that the pace of strong house price growth seen in London could cool in the second half of the year, the Royal Institution of Chartered Surveyors' (Rics) housing market report for April found.

Some 23 homes were sold per surveyor on average in the three months to April, marking the highest figure seen since February 2008.

Heading into the summer, an overall balance of 33% of surveyors expected to see house sales lifting further rather than falling , although Rics said the market "continues to be marred by weak supply and high demand".

Some surveyors reported that a lack of choice was prompting people to "panic buy", while others were seeing more than 10 potential buyers for every property coming to market.

A balance of 26% more surveyors reported a rise in agreed sales in April, but the number of new homes coming onto the market fell for the fourth month in a row.

The report said that house price expectations for the long-term remain broadly unchanged from March, with surveyors expecting average price growth of 6% a year for the next five years.

Away from London, surveyors were increasingly expecting further price rises.

In the North West, an overall balance of 62% more surveyors expected prices to rise rather than fall over the coming three months and in East Anglia this figure was 57%.

The net balance of surveyors predicting values would lift rather than fall over the next three months was 29% in Wales and 46% in Scotland.

In Northern Ireland, where prices plummeted following the economic downturn and have only recently started turning around, a balance of 64% of surveyors were expecting values to lift in the coming months.

But in London, the balance of surveyors with rising price expectations had fallen back, from 61% in March to 49% last month.

London has been seen as the driver of much of the house price growth that has happened over the last year.

According to Land Registry figures, London house prices have risen by over 12% in the last year, a rate which is more than double the national average.

The Help to Buy scheme, which helps people with 5% mortgage deposits to buy a property, was said to be helping to fuel demand in the housing market alongside improving consumer confidence in the economy.

London has also been experiencing strong interest from wealthy overseas investors who are hunting for good returns on their cash.

Rics' report quoted a Portsmouth-based surveyor who said that a "major lack of supply is causing panic buying" of homes with two and three bedrooms.

Another surveyor, based in East Grinstead, West Sussex, told Rics: "three bedroom semis in particular have jumped in price due to a serious shortage of stock".

A Guildford-based surveyor said: " Shortage of stock still an issue with more than 10 buyers for every property and prices rising".

Meanwhile, a Cardiff-based surveyor reported a continued shortage of first-time buyer homes, "resulting in asking prices, or above asking prices being obtained".

Another surveyor, based in Edinburgh, said Help to Buy was continuing to push up sales, while a Belfast surveyor said: "I think most people are satisfied that we have reached the bottom and there is an uplift in prices".

Simon Rubinsohn, chief economist at Rics, said: "House prices in general look set to remain firmly on the upward trend, although interestingly, there are some tentative signs that the price momentum in the London market may begin to slow in the second half of the year.

"The critical issue for the market remains the lack of second hand supply, with our numbers suggesting that the picture is, if anything, getting worse.

"It is too early to conclude whether this will undermine the positive trend in transactions volumes, but clearly the absence of properties to buy will ultimately be a factor in influencing the ability of people to move homes."

The findings come as speculation mounts over whether further action will be taken to dampen house price growth amid concerns about the possibility of strong rises in values leading to a crash.

Last week, the Bank of England hinted that more steps could be taken and yesterday think-tank t he Organisation for Economic Co-operation and Development (OECD) said measures should be considered "to ensure a balanced housing market recovery".

Some experts have suggested the market could be slowed in the coming months as the process of getting a mortgage had become toughened.

New lending rules came into force in April which ask more questions of borrowers to make sure they can afford their home loans, while there have also been signs of mortgage rates edging up.

Rics said tenant demand in the rental sector continued to see "modest growth" as Help to Buy had seen the appetite to rent a property lose momentum.

Rental prices were expected to grow by less than 2% across the next 12 months.

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