A U.K house price index is currently displaying figures higher than they have been in over 10 years, the Royal Institution of Chartered Surveyors has announced.
The study illustrates that the current index is 54, which represents its highest total since June 2002. This also compares to an index of 41 back in August which represents a massive increase by 13 in the past two months. Furthermore, a separate index that gauges price expectations has risen to 48, which represents the highest value since May 2002.
The raise has been attributed to recent government policies such as the Help To Buy scheme that has been said to have enticed more consumers into buying property again.
And it comes at a time where the government is beginning the implementation of the second part of its Help to Buy mortgage scheme. The scheme has received a high amount of criticism for its potential to cause a house bubble and its lack of concentration on house building. Critics have argued that an increase in demand without an equivalent rise in supply will lead to artificial inflation in house prices within the market which could have dire consequences.
“It’s encouraging that the market is starting to improve in all parts of the country,” stated Peter Bolton King, RICS global residential director. “It’s a big concern that the supply of property coming to the market is lagging so far behind demand. This imbalance is likely to result in further upward pressure in prices.”
Despite the index the Bank of England has also identified activity within the property market to be poor compared to the average amount over the past 20 years.
The index, which assesses quantity of new buyer enquiries, dropped to 49 in September compared to 65 in August. However, the index for sale expectations has increased to a value of 56 suggesting that the government’s policy has indeed had an impact on restoring consumer interest into the property market.
The Royal Institution of Chartered Surveyors have identified that housing costs has risen in every area across the UK in September, excluding the North. Both London and the South East of England have experienced the highest rise in property prices with increases set to be persist in the indefinite future. Prices across the UK are expected to rise by at least 2.6% in the next year whilst Londoners are set to witness their property prices increase by a sizeable 9% over the next half decade.
The RICS also pointed to the economic recovery as a factor in the increase in demand across the UK. Statistics have indicated that growth across the country has increased in the second quarter of this year, and a further improvement is expected to be announced for the third quarter ending in September.
Statistics from secured loan provider Halifax illustrated that property values rose for an eighth consecutive month in September.
“Stimulus such as the Bank of England’s Funding for Lending scheme and the government’s Help to Buy initiative have also had important roles,” RICS said. “Anecdotal evidence from responses to this survey suggests the latter policy, in particular, is now having an effect.”