UK house prices to rise by 6% in 2016

A lack of houses in the private market is leading many to suggest that there will be an increase in house prices during 2016, this increase is expected to be much higher than any rise in household incomes.

Summary
– According to the RICS housing forecast there will be an average increase in UK house prices of 6% over the course of 2016.
– A housing shortfall will push prices up.
– Transactions to increase to between 1.25 and 1.3 million, from 1.22 million in 2015.
– Government initiatives hold out the prospect of further material uplift in the development pipeline.

Housing has become a much more important agenda item for the government in recent times, and despite the many initiatives announced this past year the delay in development means that house prices and rents are expected to increase further in the next year. The lack in the housing stock will continue to drive these house prices and rents higher.

Being ever optimistic, an increase in new builds with significant incentives are being put in place to deliver more starter homes. This will not itself stop the increasing house prices, but it may help to slow the rate of growth down closer to the increase in household incomes.

The main concern with these measures is the promotion of home ownership, the discouragement of buy-to-lets could see private renting taking more of the strain of the housing market.

Regional Variations

With the average increase across the UK of 6% there are some counties which are always much above or below trend. East Anglia is expected to rise 8%, while the North East is much lower at just 3%. The highest levels of transactions are likely to be seen in the North East, Wales, Scotland and Northern Ireland.