UK HOME RAISE-UK home prices to build on recent gains but supply an issue, Reuters poll finds

British home prices will rise modestly this year and increase faster than overall inflation in the next two years, according to housing market specialists polled by Reuters, supported by expected reductions in borrowing costs and a dearth of supply.
The 1.8% increase predicted for 2024 will be outpaced by wage growth. Coupled with an expected fall in mortgage rates, all 19 respondents to an extra question said purchasing affordability for first-time buyers would improve over the coming year.
“Stable house prices combined with real income growth should aid affordability this year,” said Aneisha Beveridge, head of research at estate agency Hamptons.
While prospective buyers may be better able to finance a purchase, supply remains a problem, especially for entry-level homes.
All 17 specialists answering another question said the supply of affordable homes would fall short of demand over the coming two to three years, including 11 who predicted it would be far short.
“Construction is throttled by a lack of positive sentiment among developers. They will only build again when there are sure signs of market and political stability,” said property consultant Russell Quirk.
Earlier this year, major housebuilders cut their building targets. Persimmon (PSN.L),  last month said it was confident for the rest of 2024, while Taylor Wimpey (TW.L),  posted an improvement in its sales rate but both left their building targets unchanged.
The government should get more involved in improving affordability, according to 13 of 16 respondents to an extra question.
Reducing housing taxes, encouraging office conversions, loosening planning restrictions and expanding shared equity initiatives were some of the ideas mooted.
Prime Minister Rishi Sunak last week called a national election for July 4 and is lagging Keir Starmer’s Labour Party in polls.