Poll shows fastest rise since late 2006 peak, with Rics saying Osborne schemes risk pushing prices to unaffordable levels
House prices are rising at their fastest pace for almost seven years, according to the latest survey to point to a property market on the rise.
Rising prices and growing demand have also driven a jump in the number of people putting their homes on the market, according to the Royal Institution of Chartered Surveyors (Rics).
Its survey echoed a report from Britain's largest mortgage lender, Halifax, last week that house prices were 5.4% higher than in the summer of 2012. Estate agents polled by Rics indicated the fastest rise in prices since their peak in late 2006 as government schemes such as Funding for Lending continued to improve access to mortgages.
Rics warned, however, of the risk of prices soaring to unaffordable levels, echoing commentators who have warned that George Osborne's property market schemes could spark another house price bubble.
The group said that although the market conditions were prompting more people to put their home on the market, demand still outstripped supply.
"During August, the number of would-be buyers increased yet again as increasingly accessible finance allowed more people to enter the market," the Rics report said.
Peter Bolton King, the Rics global residential director, added: "It's not surprising that more and more people are looking to sell their homes. Buyers are out there and prices are on the up so if you're looking to move it's a good time to do so. What we don't wish to see, however, is prices rise to such an extent that they become unaffordable.
"For the market to work properly, it's vital that property is both accessible and affordable, and we'll be monitoring the situation very carefully as the housing sector continues to recover."
Following government moves to improve access to mortgages, there have been reports of first-time buyers flocking into the housing market.
LSL Property Services, which owns estate agencies including Your Move, suggested last week that there were more than 26,000 first-time buyer transactions in July – an increase of 45% on the same month in 2012.
The Rics report said the Funding for Lending scheme and Help to Buy "appear to be part of the reason for the pick-up in activity".
The report's headline prices balance stood at 40, based on the proportion of respondents reporting a rise in prices minus those reporting a fall. That was the highest since November 2006 and compared with 36 a month earlier.
Rics said each region across the country saw supply increase in August as the recovery continued to spread from south-east England to other areas. The South West and the North East, in particular, saw the number of new homes coming onto the market rise significantly.
Rics added: "It seems that recent price rises are going to continue unabated."
The estate agents surveyed expect prices across Britain, on average, to increase by 2.2% over the coming year and by 4.4% in each of the next five years. At the start of this year, those respective figures were 0.6% and 3.4%.
The survey of 348 agents will intensify fears of unsustainable rises that will leave another generation saddled with huge debts.
Experts' concerns about another bubble centre on the Help to Buy scheme, which was introduced in April and provides equity loans for first-time buyers of up to 20% towards the cost of new-build properties worth up to £600,000.
The International Monetary Fund and others have criticised the scheme, which will be expanded in January to make the loans available to all buyers and all types of property up to the £600,000 limit.
Some of the estate agents surveyed by Rics predicted a boom as a result of the government schemes; others were more cautious about their impact.
"The second stage of the government's Help to Buy scheme in January 2014 could create a bubble," said Michael Brooker, an agent in Crowborough, East Sussex.
Others were less confident the price rises would last.
Julian Dyer in the Welsh town of Abergavenny, said: "The market has definitely perked up over the last 6 months, however the market seems very fragile, and I am not convinced that the upturn is sustainable. The government initiative to help builders does not seem to have worked in this area."
Article Source : http://www.guardian.co.uk
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