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Scottish house prices to keep growing

Demand is continuing to outstrip the supply of houses in the Scottish property market, creating expectations for future house price growth across the country.

These are the findings of the latest survey by the Royal Institution of Chartered Surveyors (RICS), which found that 52% more chartered surveyors in Scotland are predicting that house prices will continue to grow rather than fall over the next three months. This expected rise is being attributed to a growth in demand combined with a limited supply of houses on the market.

UK wide price rises

Over the last month prices apparently remained steady, with a net balance of 42% more survey respondents saying they have seen prices rise in Scotland. The same picture is being reported across the UK, with each region seeing a rise in prices for the second month in a row.

Some areas are undoubtedly doing better than others, but overall the property market is reacting in a positive way to signs of economic recovery as well as to Government incentives designed to boost the market.

Lack of new properties a concern

However, RICS has expressed concerns over the lack of new properties coming onto the housing market. According to Sarah Speirs, who is the Director of RICS Scotland, this is one of the issues that the recently launched Scottish Housing Commission aims to address.

Despite this, the situation is undoubtedly more positive than it has been over the past few years, with the rate of increase in future transactions predicted to hit record levels over the next few months. According to RICS, a net balance of 78% of Scottish surveyors are expecting the number of sales to increase in early 2014, partly as a result of Government initiatives such as the Help to Buy scheme.

Halifax House Price Index

The positive picture regarding future house prices highlighted by the RICS survey has been supported by the findings of the Halifax House Price Index for November 2013, which found that house prices in the UK were 2.1% higher in the three months to November than they were in the preceding three months.

Other key facts identified by the Index include:

  • Prices in the three months to November were 7.7% higher than in the same three months a year earlier. This continued the upward trend in the annual rate.
  • House prices increased by 1.1% in November. This was apparently the tenth successive monthly increase; however the average price is still 12% below the August 2007 peak.
  • Activity is on a definite upward trend. Home sales increased for the sixth successive month in October to 94,950; 24% higher than in October 2012. The number of mortgage approvals for house purchases – a leading indicator of completed house sales – was 11% higher in the three months to October than in the previous quarter and 31% higher than in the same three months last year.

Government schemes have boosted market

“Stronger demand, combined with an insufficient increase in housing supply, has resulted in increases in house prices accompanying higher activity this year,” explained Martin Ellis, housing economist. “Low interest rates, improvements in consumer confidence and official schemes, such as Funding for Lending and Help to Buy, all appear to have boosted demand. However, continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices.”

“We are also seeing signs of a revival in housebuilding, which should help bring supply and demand into better balance and curb upward pressure on prices over the medium and longer terms,” he added.

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