Housing market looking good, says RICS

The Royal Institute of Chartered Surveyors says the June 2006 price index from the Department of Communities and Local Government shows housing market conditions are good.

Figures released by the DCLG show house prices rose 5.2% from year ago levels in June 2006, compared to 5.6% in April and a recent low of 1.6% last October.

Davis Stubbs, economist at RICS, says: “While the pace of house price inflation on the government’s official measure has slowed somewhat, significant momentum remains in the market which has strengthened consistently since last August’s interest rate cut.

The figures are based upon 45,000 completed property purchases per month from about 50 mortgage lenders.

“House price rises remain strongest in Wales, Scotland and Northern Ireland.
Northern Ireland is the only location to still be recording double-digit house price rises. However, price rises across southern England, despite a slight slowing this month, have accelerated over the past six months.

Falling prices last autumn have been replaced with moderate price rises of between 4% and 6%. The East and East Midlands have the weakest markets with prices growing at under 3%. The number of new mortgage approvals increased again in June to 120,000, and have averaged 115,000 per month during 2006.

This is well above the historical average of around 100,000, indicating that housing market conditions are good, underpinned by a stronger economy this year.

Moreover, RICS estate agents have reported that good trading conditions in June have continued in July, despite the hot weather and the onset of the school holidays. This points to house prices continuing to show modest rises into the second half of 2006, despite this month’s interest rate increase.”