Property prices are set to rise by an average of 5% across London over 2016 according to a report by the Royal Institution of Chartered Surveyors (Rics).
Despite recently announced government schemes aimed at helping those on lower incomes get onto the property ladder, the research suggests supply shortfall will continue pushing prices higher.
The Government has increased the Help To Buy equity loan from 20% to 40% in the capital, meaning someone on a £36,000 wage might be able to make a purchase – as opposed to the previous £56,000 average needed to buy.
Across the country prices are expected to increase by 6%, but East Anglia will see a rise of 8% and prices in the North East are predicted to increase by 3%.
Rics’ chief economist Simon Rubinsohn 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 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.”