House prices forecast to keep rising in 2014

House prices in the South West are set to rise again as demand continues to exceed supply, surveyors have forecasted.

According to new figures released today by the Royal Institute of Chartered Surveyors (RICS) house prices in the South West will increase by a further 7% over the next year.

Rental costs are also set to rise by a further 2% which will carry over into the cost of living.

The forecast is echoed nationally as well with the average UK house price set to rise by 8% in the next year.

London house prices again see the largest increase, jumping up by another 11% remaining as the most expensive housing market in the UK.

Elsewhere, however, the gains are much more modest with North East of England and Northen Ireland increasing by the lower figures of 5% and 4% respectively.

RICS director Peter Bolton King said: "We expect all areas of the country to see prices increase, with London, predictably, recording the biggest rises.

"The improving economic picture aside, this is largely down to the fact that buyer numbers considerably outweigh the amount of homes on the market.

"While the number of new homes being built is now on the rise, it still won't be anywhere near enough to meet demand and we expect the problem of insufficient housing stock to be the main driver behind price increases over the next 12 months."

RICS have said that house prices have, on average, risen by 5% this year with houses beginning to reach pre-recession levels.

The surveyors have attributed Government schemes such as “help to buy” which allowed more buyers to afford mortgages pushing up demand on housing.

However the rapid rise in prices has led to some commentators warning of a potential housing bubble.

To calm these concerns the Bank of England announced last month that “Funding for Lending” will no longer cover new housing loans from 2014.

The bank of England has said that and will instead focus on loaning to businesses with the money set aside for the scheme.

New mortgages are also set to be less profitable as lenders are now required to hold additional capital for new home loans.