Low housing supply in the UK has not deterred the reduced expectations for house price growth by surveyors.  According to the Royal Institution of Chartered Surveyors (RICS), house prices should grow by at least 5% a year over the next five years.  The growth level is somewhat subdued from previous months predictions overall and much of that is due to the lower expectations for London which has been downplayed from an expected 9% a year growth in March to now under 5%.

Simon Rubinsohn, chief economist at RICS, said, “What we are really seeing is some of the very strong upward momentum starting to come off the housing market, as a lack of supply, higher prices, more prudent lending measures and some of the talk from the Bank of England are creating a level of caution among sellers and buyers.”

Several housing market indexes have shown that the rise in house prices when viewed month to month are significant but quarter to quarter there is less impressive growth.

Many economists believe there will be a natural normalizing of the market when house prices rise to the point that buyers walk away and the demand shifts downward allowing supply to gain ground.  Such an event will allow the market to stabilize without the need for a rise in the Bank of England’s standard base interest rate which many see as necessary to continued economic growth by allowing borrowing to remain cheap for remortgages and mortgages.

Lenders have attractive remortgage and mortgage deals but lending has tightened with restrictions coming onto the back of the introduction of the Mortgage Marketing Review.  Borrowers are advised to prepare for longer processing times as homeowners and home buyers are required to share more details about their spending and saving habits in their applications.