U.K. House-Price Growth Maintains Momentum With Supply Plungingby
RICS says ongoing property shortage driving values higher
Acadata says prices rose 0.6% in November to new record
The momentum in the U.K. housing market is showing little sign of fading as a worsening supply shortage drives prices higher, separate reports on Thursday showed.
A monthly index by the Royal Institution of Chartered Surveyors showed values rose at a “firm pace ” in November as the number of properties being put on the market fell for a 10th month. Acadata and LSL Property Services said prices increased 0.6 percent last month to a record 290,640 pounds ($441,200). Prices were 6 percent higher from a year earlier.
Low borrowing costs and an improving economy are helping to drive British housing demand, with the lack of supply further fueling price increases. While the U.S. Federal Reserve may raise interest rates for the first time since the financial crisis as early as next week, the Bank of England is forecast to keep its record-low borrowing costs for now.
“It is hard not to envisage prices continuing to climb upwards as we move through the early stages of 2016,” said RICS chief economist Simon Rubinsohn, citing the lack of stock. “A material rise in the cost of borrowing has the potential to take some of the momentum out of the market, but there is, at this stage, little indication that the BOE is minded to take a steer from the Fed.”
In its analysis, Acadata said the government has put in place “substantial demand-side stimulus” across the housing market. While it’s also introduced measures to boost supply, it said housing output is still too low and the plans won’t be enough to substantially reverse price pressures.