UK house prices edge higher in November, RICS says

The government’s move to brake home purchases by people looking to rent them out might ironically have had exactly the opposite effect in November, as investors moved to front-run changes in tax legislation, the results of a survey showed.

The Royal Institution of Chartered Surveyors’s house price balance edged higher from +49 in October to +50 for November, in-line with economists’ expectations, with further rises considered likely before the anticipated increase in taxes, RICS’s chief economist, Simon Rubinsohn, said.

In November, the chancellor announced that stamp-duty on such purchases would be hiked by three percentage points.

Demand for properties jumped to a three-month high, RICS said in a statement.

Policy-makers at the Bank of England also seemed set on pursuing measures to curb buy-to-let mortgages.

The trade group forecast that house prices in London, the South East and East Anglia would rise by a further 5% over each of the next five years.

Some 62% of the poll respondents said homes in the South East were either “expensive” or “very expensive”, whereas 100% of Northern Irish and 92% of Northern English believed homes in their jurisdictions offered ‘fair value’ for money.

Pantheon expects faster house price growth

“Demand looks set to remain strong in the near-term, as mortgage rates are cut again to reflect recent falls in wholesale rates, banks increase the availability of secured credit, and buy-to-let investors rush to complete transactions before a higher rate of stamp duty on second homes is introduced in April,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics said in a research note sent to clients.

The balance of new buyer enquiries picked up from +7 to +16 in December.

On a more positive note, the balance for new sales instructions rose from -6 to +4 – to its highest level since July 2014.

That indicated “some improvement in supply conditions,” Tombs pointed out.

“But […] the average number of unsold properties per surveyor fell again to its lowest level since the survey began in 1978, underlining that supply conditions remain tight,” the economist added.

Tombs was forecasting house prices would rise by 8% in 2016.