Biggest shortage of homes for sale in nearly six years is pushing UK house prices higher, say property experts
05-16-2015
- April's fall in new instructions was the steepest since May 2009, RICS said
- Prices rose across all UK regions for the first time since August last year
- Agreed sales across the UK stood at -3 per cent in April
By Camilla Canocchi for Thisismoney.co.uk
The biggest shortage of properties for sale in nearly six years helped push house prices higher last month, with each UK region recording an increase, new data suggests.
The Royal Institution of Chartered Surveyors said that while one of the reasons behind fewer houses coming into the market could have been uncertainty surrounding the General Election, the supply shortage was reflective of ‘deeper underlying problems’, the group said.
The latest survey of RICS members revealed that a net balance of -21 per cent reported a fall in new instructions and that 33 per cent more surveyors reported price rise in April, up from 22 per cent in March.
House prices: The balance of respondents reporting a price rise was positive in each UK region last month
Moreover, the balance of respondents reporting a price rise was positive in each UK region for the first time since August last year, with prices in London accelerating again after months of no growth.
Some 28 per cent more respondents saw prices in the capital rise - compared with 6 per cent more surveyors in March who saw house prices fall, according to RICS. As fewer properties come into the market, agreed sales across the UK stood at - 3 per cent
The report forecasts property prices to rise by 2.7 per cent across the UK over the coming 12 months, with 72 per cent of surveyors expecting prices to rise.
The news will pile further pressure on the new Conservative government to do something to boost building of new homes as April’s fall in new instructions was the steepest since May 2009.
Rising: House prices across the UK crept up last month, according to RICS
Jeremy Blackburn, head of policy at RICS, said the affordability and availability of homes in the UK was now a ‘national emergency’ and that the Government should make it a priority to address such issue.
‘The last time we were building 300,000 homes was in 1963 under Harold Macmillan’s Conservative government, which utilised both public and private building,’ Blackburn said.
All political parties have pledged to increase homebuilding, although figures show that while private developer building is below its long-term average, it is an almost complete lack of local authority housebuilding that has stood behind Britain's shortage of new homes.
Simon Rubinsohn, chief economist at RICS, said: ‘It is conceivable that the decisive outcome to the election could encourage a pick-up in instructions to agents and ease some of the recent upward pressure on house prices, but it is doubtful that this will be substantive enough to provide anything more than temporary relief.
‘Alongside an increased flow of second hand stock, it is absolutely critical that new government focuses on measures to boost the flow of new build.’
Meanwhile, surveyors also expected rents to continue rising as tenant demand rose across all UK regions in the three months to April, RICS said.
The report forecast rents will rise by about 5 per cent each year for the next five years.
‘The downward trend in owner-occupation rates across the country is a visible sign that affordability constraints bite ever deeper, as does the squeeze on household budgets from higher rents,’ the report states.
Supply shortage: A net balance of -21 per cent reported a fall in new instructions in April
The report echoes recent data from mortgage lending giant Halifax, which recorded a 1.6 per cent rise in house prices in April, also putting the increase down to supply of properties for sale remaining tight.
The average property price in Britain stood at another record high of £196,412 last month – up £3,084 compared to March, when house prices had grown by a slower monthly rate of 0.6 per cent, Halifax has said.
House price growth has slowed down since the second half of the year, although prices were still 8.5 per cent higher than last year in the three months to April. This is compared to 8.1 per cent in the three months to March, Halifax said.
Falling: Agreed sales across the UK stood at -3 per cent in April
But prices could be set to be rising even further, high-end estate agents suggest, inflated by demand from high-end buyers who are returning to the property market now that the new Conservative government will not make them pay mansion tax.
The mansion tax – which would have seen those who own properties worth £2million or more taxed at one per cent – threatened to make homes above or near that value significantly less attractive.
Labour planned to use the tax to help the National Health Service.