Souce: The Guardian
House prices are likely to continue to rise in 2016 as building lags demand for homes, the UK’s biggest building society has warned.
The average price of a property in the UK increased by 0.3% in January, and is 4.4% higher than a year ago, Nationwide said.
Robert Gardner, chief economist at the building society, said the pace of growth remained broadly stable, but “the risks are skewed towards a modest acceleration in house price growth”.
He added: “The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”
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Nationwide said the average price of a property in the UK was £196,829 in January. The figures, which are based on mortgages approved by the society during the month and are seasonally adjusted, showed quarterly growth of 1.3% – broadly in line with the previous three quarters.
House price growth slowed at the start of 2015, but appears to have picked up in recent months. One factor has been a shortage of supply of properties for sale. The National Association of Estate Agents (NAEA) said the average number of homes listed with each of its members fell to 37 in December – half the figure it was 10 years previously.
Although the number of house hunters registered with each agent saw a traditional December drop, it was higher than the same month of the previous year and 10 times the number of properties available.
The NAEA said an average of 374 buyers were registered with each agent, down from 403 in November, but higher than the 360 potential buyers recorded in 2014 and the 302 in December 2005.
Gardner said demand was supported by jobs and low interest rates.
“Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation-adjusted terms regular wages continue to rise at a healthy pace,” he said.
“With this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead.”
The NAEA said 44% of its agents had seen an increase in interest from investors as they tried to beat the stamp duty surcharge that comes into effect in April. Meanwhile, first-time buyers were continuing to struggle. Just under a quarter (24%) of sales were to first-time buyers in December, down from 26% in December 2014.
Mark Hayward, managing director of the NAEA, said: “We are still waiting to see new homes being built, and while we wait, house prices continue to rise.
“There is some potential light for first-time buyers – once the new tax rate increase in April is in place we may see less investment from buy-to-let or second-home investors, which may mean less competition for first-time buyers.”
Housebuilders have denied that they are hoarding land to push up prices, with Jennie Daly, UK land director at Taylor Wimpey, saying only 40,000 plots were “shovel ready”.