House prices have started to rise again for the first time in 15 months claims the Royal Institution of Chartered Surveyors (Rics).
It latest Housing Market Survey claims the three months to November saw 4% more chartered surveyors reporting rises in prices than falls compared to October’s figures which showed a balance of 8% reporting falls.
The Rics says buyer enquiries have consistently risen over the past six months and the market slowdown appears to have come to an end. It also says relatively low interest rates and a healthy job climate have helped avoid the housing crashes that followed previous slowdowns in the 1970s and 1990s.
Meanwhile surveyor confidence is at its highest in 18 months and property sales for November have increased.
Moreover, while Gordon Brown’s decision not to allow residential property to be included as part of a self invested personal pension (Sipp) has diminished property investment possibilities, the Rics does not expect this to have an impact on the market next year, particularly given individuals may soon be able to take advantage of property investment tax breaks by using a real estate investment trust’s to invest indirectly in residential property.
The Rics says it expects a rise in UK house prices of 4% in 2006 and 4% in 2007. It predicted an upturn of 3% for 2005 based upon the Office of the Deputy Prime Minister index, which, it says, is likely to be close to the eventual figure to be announced in February.
It says the modest pick-up in house price rises for next year reflects the impact of the August interest rate cut, as well as the lift from an expected 0.25% interest rate cut in the first half of 2006. Although if wage data due out early next year is particularly weak, the Bank of England could be dissuaded from further cuts too early in the year.
Ian Perry, a spokesman for the Rics, says: “All the numbers point to renewed price rises. There is a universal expectation from agents that interest rates are heading down again in the New Year, which is providing the market with confidence.
The biggest increases have been seen in London where city bonuses are expected to help the market along in the coming months.”
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