RICS: Government failing to tackle property drought
The Government needs to address the issue of housing supply according to surveyors.
The Government is failing to curb house price growth by focusing on stimulating demand rather than tackling the shortage of homes for sale, according the Royal Institution of Chartered Surveyors (RICS).
The latest RICS UK Residential Market Survey, which rounds up member surveyors’ views on house price trends, shows 44% more saw house prices rise in July, while 22% more surveyors reported a drop in new instructions. At the same time, the average number of properties for sale per surveyor slipped to a record low, but new buyer enquiries rose for the fourth consecutive month.
This imbalance between supply and demand is pushing house prices up and RICS predicts all areas of the UK will see ‘sizeable house price gains’ over the next year, unless action is taken.
Government fail
RICS said the Government needs to come up with a "coherent and coordinated house building strategy" to ease pressure on house prices.
The trade body explained that although the Government has put home ownership at the heart of its agenda, it has focused on the wrong area.
Schemes like the Starter Homes Initiative, which will give young first-time buyers a 20% discount on their first home, and the extended Right to Buy, which allows housing association tenants to buy their homes at a discount, have boosted demand. But they have completely failed to address the real issue of supply.
RICS has called for measures that will kickstart the supply side, like mapping brownfield areas and addressing planning restrictions.
It said changes to zonal planning, dispute resolution for S106 and local plan enforcement have helped, but these alone are not a good enough strategy for increasing housing supply across all tenures.
What’s in store for house prices?
Over the next three months 41% of RICS members expect prices to rise thanks to the ongoing imbalance between supply and demand.
In the longer term RICS predicts all areas of the UK will see ‘sizeable’ house price growth over the next 12 months and indicates East Anglia and Northern Ireland will be areas to watch.
RICS warns that the renewed acceleration in house price inflation coupled with a fairly flat trend in sales activity highlights the "very real challenges" being presented by the housing market.
Supply outstripping demand and putting pressure on house prices will be the predominant pattern, it said, though that trend could be dampened when Base Rate eventually begins to rise and credit conditions change for borrowers.
What do you think? Should the Government be doing more to boost supply? Let us know your thoughts in the comments box below.
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