House prices are rising at their fastest level since 2006, and demand continues to outstrip supply, according to the Royal Institution of Chartered Surveyors.
The latest report by the Royal Institution of Chartered Surveyors (Rics), warns that the sudden recovery of the property market may not be sustainable. The report indicates that, although the recent increase in prices has prompted more people to put their properties on the market, demand still outstrips supply and we could be approaching another bubble.
The survey echoes the findings of a report by Halifax last week, which revealed that house prices were 5.4% higher than in the summer of 2012. The Rics report said:
“During August, the number of would-be buyers increased yet again as increasingly accessible finance allowed more people to enter the market.”
However, Peter Bolton King - global residential director at Rics - warned of the possibility of another housing bubble, adding:
“It's not surprising that more and more people are looking to sell their homes. Buyers are out there and prices are on the up so if you're looking to move it's a good time to do so. What we don't wish to see, however, is prices rise to such an extent that they become unaffordable.
“For the market to work properly, it's vital that property is both accessible and affordable, and we'll be monitoring the situation very carefully as the housing sector continues to recover.”
LSL Property Services, who own agencies including Your Move, suggested that there were over 26,000 first time buyer transaction in July - an increase of 45% on the same month last year. The Rics report indicated that government schemes such as Funding for Lending were partly responsible for this sudden surge in the market. The scheme - which is set to be expanded in January to include all buyers and all types of property up to £600,000 - has been criticised by the IMF and others.
The Rics report added that “it seems that recent price rises are going to continue unabated.”