UK home prices jump as survey agency doubles forecast for 2015 gain

Chimney pots line the rooftops of houses in the Herne Hill district of London, where house prices are continuing to rise.
Chimney pots line the rooftops of houses in the Herne Hill district of London, where house prices are continuing to rise.PHOTO: BLOOMBERG

LONDON (BLOOMBERG) - The Royal Institution of Chartered Surveyors (RICS) said UK house prices will rise twice as fast as it previously anticipated this year as a shortage of properties widens the imbalance between supply and demand.

Values will increase 6 per cent in 2015, up from 3 per cent predicted at the start of the year, RICS said on Thursday (Sept 10) in London. Its monthly house price index rose to a 15-month high of 53 in August from 44 the previous month. A separate report from Halifax showed values jumped the most since May 2014.

"Given current market conditions, the latest data unsurprisingly show house prices continuing to rise, and at an accelerating pace," said Mr Simon Rubinsohn, chief economist at RICS. "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."

While demand has been volatile over the past 18 months, RICS said the most striking aspect of the market has been the worsening supply picture. Its measure of the average amount of stock at real-estate agents is the lowest in more than 30 years, and there is no reason to believe this will change in the near term, according to RICS.

The report from Halifax, the mortgage lending unit of Lloyds Banking Group Plc, provided more evidence that a shortage of property for sale is putting upward pressure on values. The average cost of a home jumped 2.7 per cent in August to an average £204,674 (S$444,390), it said.

"The underlying pace of house-price growth is strong," said Mr Martin Ellis, a housing economist at Halifax. "Strengthening demand and highly constrained supply are likely to mean that house-price growth continues to be robust in the short term."

Another report from Acadata on Thursday showed house prices recorded the biggest monthly increase in a year in August.

Acadata also highlighted the "mismatch between sellers putting homes up for sale and buyer demand". Its report showed values rose 0.7 per cent in August compared with July and were up 4.1 per cent on an annual basis.