House demand is ‘far exceeding’ supply, Royal Institution of Chartered Surveyors warn.
Property brokers have issued a warning to the current administration, highlighting that there is a huge deficit between house demand and actual supply in the UK at the moment.
According to the Royal Institution of Chartered Surveyors, the gap between supply and demand is now at its largest level in four years, whilst estate agent citations of house rises is also at an 11 year high.
The organisation has identified that the number of prospective house buyers was vastly greater than the quantity of property available on the market at the moment and has called for action to be taken with housebuilding to close the radically widening gap.
It also attributed the deficit to the government’s flagship Help to Buy and Funding for Lending schemes, arguing that reduced deposit requirements and higher levels of mortgage application acceptance had resulted in a widened gap between supply and demand.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: . “In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand and in order for the market to function correctly this imbalance urgently needs to be addressed”.
“Housebuilding starts have picked up recently but we are still well behind in terms of the amount of properties needed. If we are to create a more sustainable market, it is critical that many more good-quality homes are built in areas where people want to live,” Mr Rubinsohn added.
Introduced as a three year program, Help to Buy was first announced earlier this year and is comprised of a two pronged approach that aims to bring back consumer confidence in the property market.
The Equity Loan scheme allows new buyers to borrow up to 20% of a new build home, interest free for 5 years.
They will then be required to pay a 5% deposit in to obtain the house and will still need to find a mortgage provider to cover the other 75% of the property costs.
The Mortgage Guarantee Scheme gives property buyers the chance to only pay a 5% deposit on any house worth up to £600,000. Then can then obtain a mortgage of up to 95% of the property’s total value. Additionally, the government then guarantees the mortgages for anyone who is borrowing over 80% of the house value in case they are unable to make the payments themselves. This is to address any fears lenders might have about lending out larger mortgages to people.
Despite the Royal Institution of Chartered Surveyors remarks, statistics released today have indicated that the rate of house purchases has risen in the past month with each registered estate agent estimated to have sold 20.3 homes, the highest amount since 2008.
“Significantly, almost every region of the country saw transaction levels increase, which further demonstrates the recovery is spreading beyond the traditional economic powerhouse of London and the south-east,” a spokesperson for the Royal Institution of Chartered Surveyors said.
However, they added that: “Surveyors across the country note that while Help to Buy is boosting buyer numbers, a lack of new instructions from vendors is proving problematic.”
Despite the issue of caution, estate agents still remain positive about the current state of the market, with many praising the impact of the government initiatives for revitalising the property market.
And property prices are expected to rise again in the next few months, despite surprising statistics released today citing a slight decrease in the month of October.
House prices are expected to increase by a monumental 4.5% in the upcoming five years, and estimates about the yearly rise have increased to 3%- up from the same estimate made last month.