House prices are expected to rise dramatically over the next five years, surveyors have said.
Despite a short break in price growth over the coming months, house prices are expected to keep rising another 25 per cent in the next five years, according to The Royal Institution of Chartered Surveyors (RICS).
Simon Rubinsohn, RICS chief economist, said significant doubts remain as to whether the Government’s plan to encourage house building will be enough to keep up with demand.
“The long-term price indications for the housing market remain strong, with respondents still expecting them to rise by a further 25 per cent over the next five years,” he said.
Prices were pushed up in December as property investors sought to buy houses before a 3 per cent surcharge on their purchases takes effect in April.
But the pace of house price growth is set to slow down over the next three months as higher tax on landlords take effect, RICS predicted in its latest survey.
“We have witnessed a surge in buy-to-let activity. It is inevitable that over the coming months, April’s Stamp Duty changes will take a little of the heat out of the investor market,” Rubinsohn said.
Even if the Government builds 200,000 homes a year, inflated house prices mean 70,000 households would not be able to access the market unassisted every year, according to a recent research by Savills, the estate agent. That’s 350,000 over the five-year term of a parliament.
In London, some households with an income of £60,000 will be priced out of the housing market.
Savills said that in a typical London borough, market rent levels would need to be reduced by at least half to make them affordable to households excluded from the housing market.
Halifax, part of Lloyds Banking Group, said property values were up 9.7 per cent in February compared with a year ago, with the average home valued at £209,495.
