U.K. House Prices to Rise in ‘Modest’ 2013 Recovery, RICS Says
U.K. house-price growth will accelerate next year, helped by an improving mortgage market and as homebuilding fails to keep up with demand, the Royal Institution of Chartered Surveyors said.
Values will increase 2 percent after a 1 percent rise this year, the London-based group said in a report today. Still, the housing recovery will be “modest” because of the difficult economic environment, it said. A separate report from Acadametrics showed home prices rose 0.2 percent in November, a second straight increase.
Lending will be helped by the Bank of England’s Funding for Lending Scheme, designed to boost credit, and RICS said it has seen evidence of a “slight thaw” in the mortgage market. Growth in demand may be kept in check by a “hostile macro picture” and banks’ demands for larger deposits from buyers.
“Tentative signs of recovery in the sales market should not blind us to the very real problems that still exist,” said RICS Chief Economist Simon Rubinsohn. “Many first-time buyers will continue to find it difficult to secure a sufficiently large loan to take an initial step on the housing market.”
RICS expects housing transactions to rise to about 960,000 next year from an estimated 930,000 this year. It forecast that rents will rise about 4 percent in 2013 and it called on the government to help ensure an increase in the housing stock.
The institution also said that it “would not be difficult to project a more negative outcome given the risks to the economy,” noting that the backdrop remains “challenging.”
In its report, Acadametrics said house prices rose 3.3 percent in November from a year earlier, while transactions were up 5 percent. Out of the 10 regions tracked by Acadametrics and LSL Property Services, six posted increases in the three months through November from the same period a year earlier and four fell, according to the report.
David Brown, commercial director of LSL, said there are signs of “limited improvement” in lending levels.
“Lenders remain risk-averse and conscious of capital requirements,” he said. “Those that have started to tap the FLS have been directing additional funding towards buyers with larger deposits and buy-to-let investors looking to capitalize on attractive yields.”
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