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House price inflation to hit 6% in 2015, warn surveyors

houses in Portree Image copyright Thinkstock

House price inflation across the UK is now likely to hit 6% this year, according to the Royal Institution of Chartered Surveyors (Rics).

At the start of 2015, Rics expected that prices would rise by just 3%.

However it has now revised its estimate upwards, due to the shortage of homes on the market, and "accelerating prices".

Mortgage lender the Halifax said house price inflation in the year to August was 9%, with the monthly rise up 2.7%.

That is the highest monthly increase since May 2014.

"Strengthening demand, and highly constrained supply, are likely to mean that house price growth continues to be robust in the short-term," said Martin Ellis, Halifax economist.

The average price of a home across the UK is now £204,674, according to the Halifax measure.

In response, economist Howard Archer, of IHS Global Insight, said he was raising his house price inflation forecast from 6% to 7% for 2015.

'Uncomfortable'

The Rics price indicator was the highest for 15 months, with 53% more respondents reporting price rises than price falls.

"Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace," said Simon Rubinsohn, Rics chief economist.

"And there is good reason for this trend to be sustained into next year, however uncomfortable that may be for those looking to enter the market."

House price rises 2015: New predictions
Region Previous forecast New forecast
Northern Ireland 4% 11%
East Anglia 3% 9%
West Midlands 5% 7%
South East 5% 7%
London 0% 6%
South West 2% 6%
East Midlands 3% 6%
Yorks and Humber 5% 6%
North West 5% 6%
Scotland 4% 5%
Wales 2% 2%
source: Rics

Prices are expected to rise fastest in East Anglia and Northern Ireland.

In East Anglia, Rics has raised its forecast from a 3% rise in prices this year, to 9%.

Northern Ireland is now expected to see an 11% increase, instead of 4% predicted earlier.

Earlier this summer, Rics reported that the stock of homes for sale was at a record low, and called on the government to get more houses built.

However the Nationwide Building Society estimates house price inflation to be significantly lower than its rival Halifax.

It said prices in the year to August rose by 3.2%. It uses different methodology to the Halifax.

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