UK house prices forecast to show 6pc increase in 2016
- Credit: PA
House prices in the UK will rise by 6% next year, according to a new forecast.
East Anglia prices were predicted to lead the way with an increase of 8%, according to the Royal Institute of Chartered Surveyors' (RICS) forecast for 2016.
The North East was said to be likely to see the most modest price rises, with a predicted increase for 2016 of 3%, while London property was predicted to increase in value by 5%.
The Office for Budget Responsibility had predicted that house prices would rise 5% year-on-year until 2020.
This forecast was cited in the Treasury blue book in which George Osborne's Autumn Statement plan to build 400,000 homes in the private sector was announced.
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RICS, which is the professional body for the land, property and construction sectors, blames supply problems for the likely increase in prices in 2016, saying it will outstrip any rise in household income.
The projected 6% rise in 2016 also trumps last year's climb, which the government's Land Registry House Price Index put at 5.6% in the twelve months preceding October of this year.
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Simon Rubinsohn, RICS's chief economist, said: 'Housing has clearly leapt up the Government's agenda, but despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months.
'Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being.
'Looking further out, there is some justification for taking a more optimistic view of new build with significant incentives being put in place to deliver starter homes.
'While this may not on its own stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes.
'Critically our principal concern with the measures announced by the Government is that they are overly focused on promoting home ownership at the expense of other tenures.
'Discouraging Buy to Let could see private rents take even more of the strain if institutional investment doesn't increase significantly, particularly given the likely reduced flows of social rent property going forward.'