House price rise forecast as effects of shortage hit home
New market survey suggests sales boom likely in the current climate
HOUSE sales and prices across Scotland are expected to rise in the next three months amid a shortage of property, according to a new survey.
The latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey found buyer demand increasing and house price growth rising again in Scotland during June, pointing to renewed acceleration in the market in the second half of the year.
Demand for houses also edged up for the second successive month, with 36 per cent more chartered surveyors receiving new buyer inquiries in June.
One reason for the slight recovery in buyer enquiries is likely to have been a further drop in mortgage rates, which is accompanying the ongoing strength of the labour market, RICS said.
Jeremy Blackburn, head of policy at RICS, said: “With the growth in Scotland’s private rented sector and the continued signs of rising rents, particularly in hotspots, we urgently need to increase genuinely affordable homes for rent in both public and private sectors.
“Encouraging the institutionalised private rented sector and freei ng c ou nc i l s and housing associations to build much-needed rented accommodation are vital.”
The research found 23 per cent more surveyors in Scotland expect prices to rise over the next three months, and 53 per cent more surveyors expect sales to increase, the highest rates since last November.
Across the rental sector, the demand and supply imbalance is also visible and instructions, which were said to have been broadly flat for the past couple of years and show no signs of a material increase, are at growing odds with the rising demand that is putting further upward pressure on rents.
The survey found 52 per cent more chartered surveyors in Scot- land reported an increased demand for rental properties in the last quarter.
John Boyle, director of research and strategy at Rettie & Co, said the research was welcome but should be treated with caution.
He said: “House price inflation is certainly up in the general market, but much of this has been due to the changes in property taxation, that brought more higher-value product to the market in the six months up to April.
“We expect this to level-off over the course of the year.
“The market at the lower end has also been supported by Help to Buy (Scotland), but this has run out of funding for this financial year, with no commitment to extend beyond 2015/16 f rom Government.”
He said agents still expected house prices to rise this year by around four to five per cent.
“Transaction activity should also pick up, but the market remains well down on peak because of lack of access to mortgage finance, affordability issues, and lack of new build supply,” he added. “There is a shortage of stock as many households prefer to ‘sit tight’ until economic conditions improve.”
Mr Boyle added: “I agree with the comments on the rental market, but Scottish Government proposals for a new, secure tenancy, particularly removal of ‘no fault possession’ and the prospect of rent controls, are causing real concern.”
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