Caution from RICS but reassurance from BoE

The number of homes sold per chartered surveyor reached its highest point since March 2008 last month, according to the latest survey from the Royal Institution of Chartered Surveyors.

In December the average number of transactions per surveyor reached 21.3 which is more than double the lowest point of the downturn back in January 2009 when respondents were selling only 9.8.

Last month a net balance of 56 per cent more chartered surveyors reported growing prices. Significantly, every area of the UK saw prices increase with (oh so predictably) London and south east England experiencing the biggest jumps.

Surveyors say they expect both sales volumes and prices to increase through the course of this year, largely thanks to easing credit markets allowing higher loan to value mortgages and, in the face of higher demand, a lack of supply.

But RICS’ global residential director Peter Bolton King sounds a warning. “The housing market is starting to thrive once more. On the face of it, this seems like good news but unless we see a marked increase in the number of homes coming up for sale we could well be looking at a price rises becoming unsustainable in some areas” he warns.

But Bank of England governor Mark Carney says there is no housing bubble now - nor will there be on his watch.

Carney told MPs on the Treasury committee that the UK’s housing market was neither unsustainable nor a threat to wider economic recovery, because mortgage approvals and sales were still improving from their low levels during the financial crisis.

"We've had an acceleration from quite a low level. Any time we see a sharp increase in credit growth we take an interest. We do have to put in some context though that it is still running below historic averages" he told MPs.

Carney repeated his promise that the Bank would review the government's Help to Buy scheme to ensure it did not overheat the housing market. But he stressed the scheme was relatively small when set against the overall residential market.

"Our general expectation has been for a continuation of current momentum - house price momentum, mortgage activity, credit growth momentum - before decelerating around the middle of 2015" he said.