Tenants are set to see the cost of renting a home rise faster than their incomes and faster even than house price growth, RICS suggests rents could rise by five per cent a year.
Next year, house prices across the UK are expected to climb by an average of six per cent and will ‘outstrip any commensurate rise in household incomes’, RICS forecast.
Northern Ireland and London could see prices climb by 5 per cent next year, while the South East and West Midlands could see hikes of 7 per cent
The Office for Budget Responsibility had predicted that house prices would rise 5 per cent year-on-year until 2020.
This is because the surveyors expect demand for homes to continue to outstrip supply going into the new year.
Northern Ireland and London could see prices climb by 5 per cent, while the North West, Wales and Yorkshire and Humberside could see a rise of 6 per cent.
In the North East, house price growth is expected to be more modest than the national average next year, with prices rising 3 per cent, RICS said.
Other regions, including Scotland and the East Midlands are predicted to see house price growth of 4 per cent next year.
East Anglia prices are predicted to lead the way with an increase of 8 per cent next year, while the South East and West Midlands could see 7 per cent price hikes RICS said.
These are predictions based on factors such as lack of supply and the impact of government initiatives.
Should house prices continue to rise faster than average incomes, aspiring first-time buyers will find it even tougher to get on to the property ladder in the new year. The problem would be compounded if rental costs continue to rise at an even faster pace as tenants will have to spend a greater proportion of their incomes on housing costs and will have less to put away towards a deposit.
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.’
Brad Bamfield, CEO of Joint Equity says “buying with Joint Equity means your deposit is lower at 5% of house price as a minimum and we use your ability to pay rent as the affordability factor. So if you have paid rent for 12 months or more we will support you up to £100 per month more than that rent.”
This means most people who can afford to rent can afford to buy with Joint Equity.