The average property price in the UK is set to rise by 6% over the next 12 months, and by as much as 8% in some areas, new figures reveal.
A report by the Royal Institution of Chartered Surveyors (Rics) reveals that the property market will be very much in the ascendancy in 2016 as a supply shortfall contributes to an increase in home values.
The data reveals that the smallest rise will be in the North East of England, where prices are forecast to rise by 3%, while the largest will be in East Anglia, with an 8% rise.
Elsewhere, the strongest growth is expected to be in the South East and the West Midlands, with 7% rises in both regions, although in terms of transactions the greatest number of overall sales will be in the North East and Scotland, as prices in these areas remain relatively low compared to the rest of the UK.
Overall, the 6% rise is set to add £17,220 to the cost of an average UK home, which the Office for National Statistics calculated as standing at £287,000 in December 2015.
The increase may eventually be greater, as Rics last year forecast a 3% rise in prices for 2015, before stating that the actual increase was likely to be double that.
Simon Rubinsohn, chief economist at Rics, said he anticipates a 0.25 percentage point rise in interest rates throughout the course of the year, but does not expect a major rise in mortgage rates.
At the same time, Rics envisages that the average cost of renting a home in the UK will rise by around 3%.
“Looking further out, there is justification for taking a more optimistic view of new build, with significant incentives being put in place to deliver starter homes,” Mr Rubinsohn explained.
He also noted that this may help to slow the rate of growth to something closer to the probable rise in household incomes throughout the year.
Meanwhile, Jeremy Blackburn, RICS head of UK policy, welcomed the ‘supply side measures’ in the Productivity Plan to balance the likes of Help to Buy.
He said that the brownfield fund, local plan enforcement and new development corporations should “help get more homes built”, and the passage of the Housing & Planning Bill is key to this.
Mr Blackburn added that starter homes should not be seen as ‘the panacea’ to help improve housing supply, and instead form part of a larger mix.
The report comes after data published by the National Association of Estate Agents forecast that the average house price across the country will rise by 50% to £419,000 by 2025, while London home values will double to an average of £931,000.