UK housing demand highest since late 2009, prices rise - RICS

LONDON Tue May 14, 2013 7:35am BST

Construction workers build a new residential property development in north London, March 21, 2013. REUTERS/Neil Hall

Construction workers build a new residential property development in north London, March 21, 2013.

Credit: Reuters/Neil Hall

Related Topics

LONDON (Reuters) - Demand for housing in Britain rose to its highest level in nearly 3-1/2 years in April, helped by a new government scheme to boost the sector, and a measure of prices notched its first gain since mid-2010, a monthly survey showed on Tuesday.

The Royal Institution of Chartered Surveyors (RICS) said 25 percent more chartered surveyors reported new buyer enquiries rose rather than fell last month, up from an increase of 13 percent in March.

The rise suggested that the new Help to Buy programme was stoking interest in home-buying even if a key component of the programme - government guarantees for risky mortgages - is only due to come into effect next year, RICS said.

The RICS said its seasonally adjusted house price balance rose for the first time since June 2010, albeit only marginally at +1, as the number of homeowners putting their homes on the market rose less quickly than demand.

Economists had expected a price reading of +2.

Peter Bolton King, RICS global residential director, said it was encouraging that Help to Buy, along with other measures to spur lending, was helping the market and that sales would probably pick up in coming months, albeit from low levels.

"However there are some understandable concerns that the measures will also lead to higher prices. In view of this, it is critical that developers are as good as their word and speed up the delivery of new stock," he said.

Other measures of the British housing market have seen an increase in prices recently. Lender Halifax said last week that prices increased 1.1 percent in April from March, the strongest growth since November.

Chancellor George Osborne announced the Help to Buy programme in March as the government's latest programme to support the housing sector.

Under the plan, the government committed 3.5 billion pounds over the next three years to shared equity loans for new-build homes, allowing buyers to purchase them with a 5 percent deposit. It will also guarantee 130 billion pounds of mortgages from 2014 for three years, allowing banks to provide more loans to people without big deposits.

Critics have said the plan risked pushing up house prices without spurring more construction.

(Writing by William Schomberg; Editing by Catherine Evans)

FILED UNDER: