Homes shortage set to push up property prices

But estate agents say that the lack of finance for new buyers could hamper a recovery in the housing market

Gráinne Gilmore, Economics Correspondent

Property values are set to rise in the next three months as a lack of homes props up prices, estate agents believe.

The number of agents expecting house prices to increase in the coming months outnumber those predicting further falls for the first time since May 2007, according to figures published today by the Royal Institution of Chartered Surveyors (RICS).

There are also signs that activity in the market is picking up, with the average number of sales completed by each estate agent branch rising to 12.7 in the three months to June, up from 11.7 in May.

Interest from buyers rose at a record rate in June, agents said.

In a further boost for the economy, high street retailers have reported a bumper June as the heatwave boosted demand for summer food, shoes and clothes.

Like-for-like sales rose by 1.4 per cent in the year to June, figures from the British Retail Consortium show.

However, the shine was taken off such positive figures by a leading policymaker, who said that while the economy probably had hit rock bottom, the recovery would be a “long haul”.

Charlie Bean, deputy governor of the Bank of England, also highlighted uncertainties in the property market, where buyers are still struggling to obtain mortgages.

He said: “It’ll take some time before banks feel in a position to lend more money.”

An influential committee of MPs, meanwhile, said that the Treasury’s scheme to boost mortgage lending was “doomed to fail”.

The Communities and Local Government Select Committee said that lack of mortgage finance was a contributing factor in the lack of activity in the housing market, but it said that the Treasury’s Asset-backed Guarantee Scheme (ABS) was not enough.

Estate agents also sounded concerns that the lack of finance for new buyers could hamper a recovery in the market.

Jeremy Leaf, a RICS spokesman, said: “It is unlikely that there will be a sustained upturn while mortgage lenders remain risk averse.” (Grainne Gilmore, The Times)

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