A CAP on house price rises would distort the housing market and favour the rich, a leading Capital property marketing company has warned.
Calls have been made by the Royal Institute of Chartered Surveyors (Rics) to limit annual house price growth to five per cent to prevent the market getting out of control.
But the proposal has been criticised by the Edinburgh Solicitors Property Centre (ESPC) – the body which sells the most homes in Edinburgh – who fear it would not give a true reflection of the market.
ESPC, whose members sell 85 per cent of homes in the Capital, said the Rics plan had major flaws.
David Marshall, its business analyst, said: “There are a number of practical difficulties with attempting to set a target or limit for house price inflation, not the least of which is that house price trends can vary substantially even within relatively small geographical areas.
“The aim of avoiding excessive or unsustainable levels of inflation is certainly admirable, but this is probably best addressed by ensuring the supply of housing – in particular affordable housing – is sufficient to meet levels of demand.”
The Rics proposal suggested The Bank of England should consider limiting yearly house price inflation in order to take the “froth” out of any future booms and put a stop to any “dangerous build up in household debt”.
It comes days after its latest survey showed increasing buyer demand and house prices had driven up the number of homes on sale in Scotland.
But figures from the Office of National Statistics reported last month that Scotland had missed out on a mini-bubble in the UK housing market over the first half of the year.
While prices increased overall by 3.1 per cent, those in Scotland dipped by 0.9 per cent. The Council of Mortgage Lenders (CML) recently reported that talk of a housing boom was “premature”.
It said that while the housing and mortgage markets were showing some initial signs of recovery this summer, current house sales are still at lower levels than they were when the UK was recovering from a downturn in the early 1990s.
Huge profits leap for building firm
EDINBURGH house builder Miller Group has announced a ten-fold increase in half-year profits.
The firm put its success down to a “marked improvement” in the property market – citing UK government initiatives including Help to Buy.
It said schemes such as this, which offer loans to buy new build properties with a deposit of just five per cent, were driving up confidence. Pre-tax profits for the six months to June 30 were £4m, from £400,000 a year earlier, as total revenue grew 27 per cent to £361.5m.
The builder has already secured 92 per cent of its full-year sales target, and average selling prices went up three per cent to £175,000.