House sales have hit a six-year peak and the ongoing imbalance in supply and demand could lead to a UK property market bubble, a leading industry body has warned.
Research from the Royal Institute of Chartered Surveyors (RICS) has found that the volume of homes sold per chartered surveyor has reached its highest point since March 2008, driven by the combination of easing credit conditions and growing consumer confidence.
The Residential Market Survey revealed that over the festive period the average number of transactions per surveyor reached 21.3, more than double the lowest point of the downturn in January 2009.
“Growing availability of affordable mortgages has released some pent-up demand from a market that, in recent years, has seen many viable buyers unable to enter the market,” said Peter Bolton-King director at RICS. “On the face of it, this seems like good news but unless we see a marked increase in the number of homes coming up for sale we could well be looking at a price rises becoming unsustainable in some areas.”
The study showed that the majority of surveyors polled expect house price rises to continue as credit conditions slacken resulting in higher loan to value mortgages.
Lucian Cook, head of residential research at property adviser, Savills, said: “The positive sentiment in the housing market is likely to result in further increases in transactions in 2014. But with the mortgage market review looming, they could remain well below the pre-crunch norm and heavily weighted to those with equity.“
However, economist Howard Archer of IHS Global Insight, added: “There is a real danger that house prices could really take off over the coming months,”
This sentiment is echoed in research from the Council of Mortgage Lenders that yesterday showed mortgage approvals were up 15pc in November 2013 on the previous year. Galvanised by the Government’s shared equity Help to Buy scheme, the report revealed that first-time buyers took out 27,000 loans in November, 24pc higher than the same month in 2012.