House prices still climbing

House prices remained strong in April

House prices in England and Wales are still rising despite signs of an economic slowdown, according to the Royal Institution of Chartered Surveyors (RICS).

The survey shows the housing market remains strong across the country

Ian Perry
RICS spokesman

In its latest report on the residential housing market, 37% of chartered surveyors reported price rises in the three months to April, compared with a revised 39% in March.

This is well above a long-term average of 22%.

"The survey shows the housing market remains strong across the country," said RICS housing spokesman Ian Perry.

Although the number of house sales has slowed down over the past three months, it has still increased by 12% since last November.

The report also warns that housing remains in short supply, which could push prices up even more.

Single homes

Regional breakdown
(% of more surveyors reporting rise in prices)

North:
58% (+5%)

Yorkshire & Humberside:
74% (same)

North West:
60% (-6%)

East Midlands:
59% (+9%)

West Midlands:
47% (+3%)

East Anglia:
84% (+4%)

South East:
43% (-5%)

South West:
46% (+8%)

Wales:
52% (+7%)

London:
34% (-18%)

Source: RICS

The problem with supply has been exacerbated by single people buying homes on their own, according to RICS.

"The rate at which new houses are coming on the market is being significantly outpaced by the increase in the number of households," said the report.

"More people are choosing to live alone. The market is not keeping up with this growing demand."

Research by the mortgage provider Alliance & Leicester indicates that single people are twice as likely as married people to be on the move in the next 12 months.

Also more women than men in their 20s or 30s plan to move or enter the housing market.

Cheaper mortgages

Three cuts to UK interest rates this year - from 6% at the start of the year to 5.25% in May - have stimulated the housing market by reducing the cost of mortgages.

RICS also attributes the strength of the market to growth in household incomes and increased employment.

In addition, the arrival of spring is increasing demand as it is a traditional time of year for house buying.

Buyer enthusiasm remains firm and is expected to support market activity despite a cooler economic outlook and the foot-and-mouth crisis

Ian Perry
RICS spokesman

The housing market in East Anglia was particularly strong in the past three months, with 84% more surveyors reporting a rise in prices than those reporting a fall.

The region has benefited from job creation during the last year.

London appeared the weakest, with only 34% more surveyors reporting rising prices than those reporting a fall.

The London figure was 18% down on the previous period.

Meanwhile, any economic malaise in the UK has not had much of an impact.

"Buyer enthusiasm remains firm and is expected to support market activity despite a cooler economic outlook and the foot-and-mouth crisis," said Mr Perry.

Alliance & Leicester also said that economic and social problems have had no significant bearing on people's decision to move house.

Within a sample of 4,000 people, the company found that 8% of homeowners plan a move in the next year, compared to 9% in the last quarter of 2000.

A market correction?

Last week the Council of Mortgage Lenders reported that UK mortgage lending in April was at the highest level since records began.

Gross lending rose to £12.6bn in April from £12.2bn the month before and £9.2bn a year earlier.

The high levels have fuelled concerns that the housing market could be due for a correction.

It is feared that many first-time buyers are over-borrowing to buy their new homes and could be heavily exposed to a downturn in the property market.

A recent report suggested a downturn could be expected because average house prices in some parts of the country, particularly London and the south east, were much greater as a multiple of average income than has been the case historically.

Most household wealth in the UK is invested in the housing market.

About 11 million people have home loans.