Yahoo Finance Coronavirus: UK house prices 'unaffordable' as index hits four-year high
Britain has seen the most widespread increases in house prices in four years despite the economic downturn.
The survey by the Royal Institute of Chartered Surveyors (RICS) found a “sharp acceleration” in prices across the UK, with the exception of London where prices were reported to be mostly flat. Four-fifths of those surveyed expect continued increases in demand for homes with gardens, outdoor spaces and local green spaces over the next two years.
It marks the latest sign of the mini-boom in the property market since lockdown restrictions eased and a stamp duty holiday was announced in England and Northern Ireland.
RICS said rising prices could make getting onto the property ladder even more difficult in some areas.
READ MORE: Britain warned it’s heading towards a housing bubble
Labour’s shadow housing secretary Thangam Debbonaire also sounded the alarm over what the latest data signalled for affordability.
“Housing is already unaffordable in vast swathes of the country” she told Yahoo Finance UK.
Debbonaire said the UK government should be building more affordable homes, rather than “ripping up” planning laws and prioritising “support for landlords and second home-owners” with stamp duty cuts.
The latest monthly RICS survey shows a net balance of 61% of respondents reporting a rise in agreed sales, the third month of growth. A net balance of 44% say prices have also risen, the highest level on the index since 2016 and a “dramatic turnaround” on the -33% reading in May.
READ MORE: UK house prices at record high in biggest monthly jump since 2016
The proportion of properties selling at asking price has risen too, reaching higher levels than in January before the virus hit.
Simon Rubinsohn, RICS chief economist, said the rebound should support the wider economy’s recover, but added: “More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country.”
It comes after data from leading mortgage lenders painted a similar picture of a rebounding market, with prices at record highs.
Halifax’s house price index released on Monday showed prices jumping at their fastest rate in four years, reaching £245,747 ($325,000) in August. Rival Nationwide said last week prices had jumped at the fastest rate in 16 years.
A small majority of RICS members expect prices to be lower in a year’s time, however. There are “concerns over the broader economic climate” among surveyors and estate agents.
The rebound in the residential property sector comes in spite of the dire state of the wider UK economy and a wave of job losses. Leading forecasters expect Britain’s GDP to shrink by 10% this year.
Government and central bank crisis measures including low interest rates, mortgage re-payment holidays, and the furlough scheme are seen to have buttressed the market.
Many in the industry expect the property market’s growth to slow if not go into reverse later this year, as the furlough scheme and mortgage holidays are wound down and unemployment likely ticks higher.
Most lenders have also begun tightening access to low-deposit mortgages, which could hit first-time buyer numbers. HSBC became the latest to cut 10% deposit deals last week.
