Thursday, 10 September 2015
House price growth in Scotland gathers pace as market conditions tighten
Acceleration in Scottish house price growth was reinforced by a failure of supply to pick up during August, according to the latest RICS UK Residential Market Survey.
Prices continued to increase last month, with a net balance of 43% more respondents reporting price rises and firm growth being seen across all areas of the UK. Further RICS analysis, using ONS data as the comparator, indicates that prices now look likely to rise in the region of 6% across the UK 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. Scotland look set align with the UK trend (5% forecast), with 28% more chartered surveyors expecting prices to continue rising in Scotland over the next three months.
RICS Scotland director Sarah Speirs, said: “Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace. As the Scottish Government increases investment in initiatives such as Help to Buy, which further stimulates demand while failing to address the critical issue of housing supply, more needs to be done to increase and expand housing supply.
“Despite reported price growth, the agreed sales balance in Scotland edged upwards and demand remains steady, but a more robust recovery in activity is continuing to be held back in part by the lack of stock on the market.”
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. In Scotland the increase in August was more modest but this follows much stronger increases in demand through the back end of 2014 and the early part of this year. New instructions, however, have yet to record any meaningful upturn since the middle of 2013, pushing average stock levels to record lows across the UK.
RICS economist Michael Hanley, 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.”
In the lettings market, tenant demand in Scotland remained firm, outstripping the modest pick-up in new landlord instructions once more in the process. Accordingly, rents are expected to increase in the near term, with 20% of respondents predicting a rise in rents during the next three months.
RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England's monetary policy committee at its monthly interest rate setting meetings.