House prices rise on lack of supply
The report shows that while 44% more chartered surveyors saw prices rise in July, supply to the market continued the decline with 22% more surveyors reporting a drop in new instructions.
The shortage of housing inventory worsened further during July, with the average number of properties for sale per surveyor slipping to a record low.
Consequently all areas of the UK are projected to see sizeable house price gains over the next twelve months, particularly East Anglia and Northern Ireland according to RICS.
Near term expectations for prices also continue to reflect the imbalance between demand and supply with 41% of members expecting prices to continue to rise over the next three months.
However rising prices have not dampened interest as new buyer enquiries rose for the fourth month in succession, with 25% of respondents reporting a rise in demand.
Despite this steady and sustained improvement in demand, newly agreed sales were more or less unchanged at the national level in July.
Going forward, there is a little more optimism regarding the prospects for activity with 37% more respondents expecting sales to gain momentum over the next three months and 40% more taking the same view on a one year perspective.
Commenting, Jeremy Blackburn, RICS’ head of policy, said: “A renewed acceleration in house price inflation allied to a fairly flat trend in sales activity highlights the very real challenges being presented by the housing market.
“More worrying still is the suspicion that the imbalance between supply and demand will lead to even stronger price gains over the next twelve months. This is also visible in the firmer pattern in the buyer enquiries series which has now risen for four months in succession reflecting in part, a further modest easing in credit conditions.
“This trend could be brought to a halt when base rates do eventually begin to rise but the dovish tone to the latest Bank of England Inflation Report suggests the first move will come a little later than previously thought likely and that subsequent increases will be very gradual indeed.”
Aldermore Group managing director, mortgages, Charles Haresnape said: “The lack of housing supply is the biggest issue facing the housing market today and the RICS survey findings underline this. The fact that nine out of 12 regions in the UK experienced a decline in new vendor instructions highlights the need for the Government to address these supply side issues in order to put the brakes on house price rises.
“One way to do this would be to bring the 610,000 empty homes in the UK back into use rather than focusing purely on building new homes. There needs to be a cohesive long-term strategy to ensure the sustainability of the UK’s housing market.”