Housing market will warm up in 2013, says RICS

The housing market will warm up in 2013, with house prices, the cost of renting and transaction levels all forecast to rise, according to the RICS.

In its annual housing market predictions, the RICS said house prices will increase by 2% next year, the cost of renting a home will go up 4% and the number of transactions will rise just over 3% from 930,000 this year to 960,000.

Despite the projected increase, the level of transactions will be well down on the pre-recession peak – there were 1.67 million total sales in 2006.

Simon Rubinsohn, RICS chief economist, said: “The average house price in the UK looks set to rise by a further two percent next year, despite the uncertain outlook for the economy.

“More positively, the amount of sales going through should also see an increase across the country, climbing to its best level since 2007, as the Funding for Lending scheme helps boost the availability of mortgage finance.

“But these tentative signs of recovery in the sales market should not blind us to the very real problems that still exist.

“Even with the Funding for Lending scheme and come other government policies beginning to be felt in the mortgage market, many first-time buyers will continue to find it difficult to secure a sufficiently large loan to take an initial step on the housing market.

“Meanwhile, the alternative of renting is becoming more and more costly with a further increase in rents likely in 2013.

“Critically, the government needs to ensure that the conditions are in place that will enable the stock of new housing, whether for purchase or rent, to rise more rapidly.”