House Prices To Soar Amid Property Shortage

Housing sales have reached their highest level for six year, fuelling fears that many buyers will be priced out of the market.

Surveyors sold an average of 23 homes during the three months to March - the highest number since February 2008, according to the Royal Institution of Chartered Surveyors (Rics).

All areas except Wales, where the level was unchanged, saw a rise in interest from buyers.

But while buying activity is rising in more regions, the expected "spring bounce", which sees more people put homes up for sale, has not happened, Rics said.

The mismatch between the lack of supply and rising demand is a "major concern" and is continuing to put an upward pressure on prices, the surveyors' body said.

Simon Rubinsohn, Rics chief economist, said: "Now that the housing market recovery is well and truly under way and mortgage finance is more readily available, buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East.

"That said, it is a major concern that we are not seeing enough houses coming on to the market.

More homes are needed in areas where people want to buy

"For the market to operate effectively, we desperately need more homes in areas where people want to buy and want to live.

"Until this happens we're likely to see prices continue to increase and it is going to be ever harder for many first-time buyers to conceive of ever owning their own home."

Prices are expected to rise by around 9.3% a year in London, which would push average property prices in the capital to over #567,000 by 2020.

While in the North prices are set to increase by 2% annually, which would see average house prices there increase to just under £132,000 by 2020.

In Wales, it is predicted house prices will rise by 4.9% annually and in Scotland a 4% rise is predicted.

Government support schemes such as Help to Buy have made mortgages more widely available, particularly for people with only smaller deposits saved who may have previously been struggling to get a deal.

But critics of the scheme argue the impact it is having in pushing up demand, without a corresponding increase in the supply of homes, is also pushing up house prices and encouraging people to stretch their borrowing.

Toughened mortgage lending rules are coming into force later this month with the aim of preventing overlending to borrowers who may end up having trouble paying back, particularly when interest rates rise.

Housing Minister Kris Hopkins said: "Leading developers have pledged to build more as a direct result of this increased demand, and we've already delivered 420,000 new homes since 2010, including 170,000 new affordable homes."

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