SW house prices continue to rise

Acceleration in house price growth in the South West continues with 63% more respondents seeing a rise in prices over the last three months, according to the latest RICS UK Residential Market Survey.   This is the highest level since April 2002.

The South West region, along with Yorkshire, is also the most confident of price rises in the near term, with 52% more respondents expecting to see a rise in prices over the next three months.  Across the UK, the RICS price indicator reached a 16 month high in August, with a net balance of 53% more respondents reporting price rises and firm growth.

Further RICS analysis, using ONS data as the comparator, indicates that prices now look likely to rise in the region of 6% over the course of 2015, compared with 3% predicted at the beginning of the year. The strongest price growth is forecast in Northern Ireland, where prices are now anticipated to rise by 11% throughout 2015.

In contrast to other regions in the UK, in the South West the pace of new instructions over the past month outpaces that of new buyer enquiries and as such the region has posted a solid growth in transactions. With 19% more respondents seeing a rise in newly agreed sales over the past month.  Sales expectations also remain positive in the region, with 23% more respondents seeing a rise over the next three months.

Simon Rubinsohn, RICS Chief Economist, said: “Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace. As such, house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014.
“And 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, given that so many of our members across the UK are telling us that they are struggling to replace the stock they have sold.”

At the national level, new buyer enquiries increased for a fifth month in succession, with 22% of respondents reporting a rise in demand, led by significant improvements in the West Midlands, Wales and the North West. New instructions, however, have yet to record any meaningful upturn since the middle of 2013, pushing average stock levels to record lows.

Michael Hanley, RICS Economist, commented: “While the UK housing market has seen some substantial volatility in demand over the last 18 months, the most consistent feature has been a distinct shortage of new instructions. With respondents reporting another fall in appraisals during August, and looking at general market conditions, we have no reason to believe this will change in the near term. Therefore, despite the fact that demand has been picking up in recent months, we have lowered our forecast for transactions for 2015 from 1.25 million to 1.2 million. Alongside this, we have revised up  our expectations for price gains this year to 6%.”