Homes boost set to continue

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The Independent Online
The recovery in the housing market seen so far this year is set to continue well beyond the summer months, boosted by continuing demand from first- time buyers and a lack of suitable homes for sale, a survey claimed yesterday.

The Royal Institution of Chartered Surveyors said its estate agency members reported significant price increases over the past few months.

Its latest survey comes amid growing evidence from estate agents and building societies that house prices and the level of sales are on the increase.

"The message we are getting from our members throughout the country is that two main trends are driving prices up - the return of first-time buyers to the market and a dearth of homes being put up for sale," said Ian Perry, chief executive of Manchester and District Housing Group and a RICS member.

"After the usual summer slow-down, we expect to see many more homeowners putting their properties on the market, encouraged by rising prices," he added.

However, the RICS survey found that prices have not risen uniformly across the UK. Some 70 per cent of chartered surveyors in London and the South- east of England are reporting that prices have gone up, compared with just 17 per cent for England and Wales.

"Our survey shows that there are grounds for optimism, but certainly no reason to suppose that there will be a return to the price increases seen in the late 1980s," Mr Perry said. "If prices continue to climb, hundreds of thousands of homeowners will be released from the shackles of negative equity [where the value of a home is less than the mortgage being paid on it]. The resulting influx of properties will then stabilise prices."

The upbeat RICS survey follows a report from Halifax Building Society earlier this month, showing that house prices rose by 1 per cent in May, the tenth month in a row. The Halifax has revised upwards from 2 to 5 per cent its estimates of the likely increase in house prices throughout 1996.

A separate report from Black Horse, the estate agency arm of Lloyds Bank, shows that some 65 per cent of potential buyers are unencumbered by existing property ownership.

They are either first-time buyers or former owners tempted back into the property market by a perception that prices have stopped falling.