House prices in the UK will end the year 6% higher than they started it, a group of surveyors has predicted.
The strong jobs market and low mortgage rates have supported demand from buyers, while the number of homes coming on to the market remains at its lowest level in at least three decades, the Royal Institution of Chartered Surveyors (Rics) said.
Its new forecast will see more than £16,000 added to the £272,000 value of the average UK house at the end of 2014.
Rics said feedback from members showing a continued tightening of supply and an increase in demand had led it to revise earlier forecasts.
The strongest price growth is forecast in Northern Ireland, where the cost of property is anticipated to rise by 11% this year. In contrast, Rics is predicting a 3% fall in the north-east of England.
The group’s latest snapshot of the market showed the proportion of surveyors reporting house price rises reached a 15-month high in August. There was solid growth in all areas of the UK.
Looking ahead, 37% more members expect prices to rise over the next three months than to fall. Over the coming year, 76% more predict an increase. As a result, Rics, which uses the Office for National Statistics index for its predictions, said price growth in 2015 was on course to be double the 3% it had predicted.
At the same time, it has revised down its forecasts for the number of sales in 2015, from 1.25m to 1.2m, despite the number of inquiries from new buyers rising for a fifth successive month. This is approximately the same level as the Council of Mortgage Lenders’ prediction of 1.21m loans over the year, which it recently increased from 1.18m.
The lack of supply has been a theme of recent reports from Rics and the property website Rightmove, and has been named as a factor in recent strong price growth. Rics said the number of new listings by sellers had declined for a seventh consecutive month in August, and average stock levels had fallen to new record lows. Each surveyor reports having fewer than 47 homes on their books.
Rics’s chief economist, Simon Rubinsohn, said: “House price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014. And there is good reason for this trend to be sustained into next year, however uncomfortable that may be for those looking to enter the market, given that so many of our members are telling us that they are struggling to replace the stock they have sold.”
In London, where transaction costs were high, Rics said there were signs homeowners were opting to extend or improve their properties rather than moving, while in the north of England, agents reported concerns over the economy and availability of mortgages.
John Haigh, of Lister Haigh chartered surveyors in Knaresborough, north Yorkshire, said: “School holidays and difficulty obtaining mortgage finance are holding back the market.”
Although transactions have been down across the market, official figures also showed use of the government’s help to buy scheme reached its highest level in June, with 4,745 purchases worth a combined £1.1bn completed during the month. The scheme, which offers an interest-free loan of up to 20% of the cost of a newbuild home, has been used 56,402 times since its launch in April 2013.
The figures from the Department for Communities and Local Government showed that while a quarter of sales were to households with an income between £30,000 and £40,000, 3% were made to those with earnings in excess of £100,000.