U.K. Home-Price Index Rises to Seven-Year High, RICS Says
The index rose to 36 from 21 in June, the highest reading since November 2006, London-based RICS said in an e-mailed report today, citing a monthly poll of property surveyors. A positive number means more respondents saw values increase rather than decline. A measure of inquiries from new buyers rose to 53 from 38, the most in four years.
Recent house price reports suggest the property market is gaining strength as demand from new buyers picks up. In addition to a strengthening economy, housing is getting a lift from Chancellor of the Exchequer George Osborne’s program to increase mortgage availability and the Bank of England’s Funding for Lending Scheme.
“It looks like at long last a recovery could be around the corner,” Peter Bolton King, global residential director at RICS, said in the report. “This is the first time that everywhere has experienced some improvement.”
A measure of the outlook for prices rose to 35 in July from 24 in June, according to RICS. It said the price expectations measure is now above zero in all regions of the U.K.
In a sign that supply is not keeping up with rising demand, the measure of new seller instructions was at 15 in July, up from 13 in June.
“The challenge presented by the short supply of stock is particularly pronounced in the capital,” RICS said. It added that the price expectations balance for London is at the highest level since September 2009.
The Treasury’s Help to Buy program, which offers buyers of new homes interest-free loans for 20 percent of the value of the property up to 600,000 pounds ($928,000), is fueling demand. Since its introduction four months ago, 10,000 reservations for new homes have been made, according to figures published on the Department for Communities and Local Government website today.
Guarantees covering buyers of existing homes will be introduced in January. The plan has drawn a warning from the International Monetary Fund over its potential to stoke home prices. Respondents to the RICS survey forecast prices will rise 2 percent over the coming year and by more than 4 percent in each of the next five years. At the beginning of the year, they forecast increases of 0.6 percent and 3.4 percent respectively.
Other reports have also painted a positive picture of the housing market. Halifax said last week that house prices rose for a sixth month in July and will continue to increase. Nationwide Building Society said on Aug. 2 that house prices rose to the highest level in five years last month.
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