'Dire shortage' of homes for sale pushing house prices even higher, but London sees eight months of stagnation
11-11-2016
- House prices across England and Wales but fall in London, says Rics
- Rics said 10% more surveyors saw demand for property jump in October
- Prices up 23% as more surveyors saw rises rather than falls in values
By Jonathon Hopkins for Thisismoney.co.uk
A 'dire shortage' of homes for sale is pushing house prices even higher, the Royal Institution of Chartered Surveyors has warned.
The number of homes coming on to the market continued to decline last month, even while new enquiries from buyers rose by 10 per cent, the monthly report based on Rics member estate agents said.
This is thwarting home buyers and driving house prices up across England and Wales, although the study found that the London property market recorded its eighth consecutive monthly fall.
Enquiries from potential home buyers are up in almost all regions, Rics' report showed, with only Wales and the East Midlands showing a decline
But most are facing a frustrating search as the number of available properties continues to fall, with a slight rise in the South East but a bigger rise in East Anglia and the South West
The number of available properties remains meagre, Rics said, although it said activity in the housing market still showed signs of a bounce back following June’s Brexit vote - with 5 per cent more surveyors seeing activity rise rather than fall last month.
Prices are on the rise, with 23 per cent more surveyors seeing values increase rather than decrease last month, compared to a reading of 18 per cent for September.
Rics chief economist, Simon Rubinsohn said: ‘The dire shortage of available housing across the UK is continuing to push prices upwards, regardless of the uncertainty linked to the ongoing discussions surrounding Brexit.
‘We are only weeks away from the Autumn Statement, and it will be interesting to see what measures - if any - the Chancellor will put in place to increase housing supply and create a more affordable market.’
The report said that expectations for house price growth over the next three months rose as well, while the lettings market ‘picked up firmly’ in the three months to October.
The Rics property market update, which is seen as a barometer for the market, comes after Halifax reported annual house price inflation falling to a three-and-half-year low, despite a surprise monthly jump of almost £3,000 in October.
Earlier this week, the mortgage lending giant said house prices were up 5.2 per cent annually to £217,411, the lowest yearly growth rate since July 2013 and a significant cool down from a 10 per cent rise in March.
The monthly data from the Halifax report, however, contrasted with Nationwide's rival index that showed UK house price growth stalled for the first time in 15 months in October. However, annually the two lenders' figures chime, with Nationwide showing a 4.6 per cent rise.
In its report, Rics said: 'The rise in prices has been fuelled by a continued fall in the number of new properties on the market, a trend that has continued for well over two years.
'Respondents reported a further slight decline in new instructions over the month and anecdotal evidence suggests that the tight supply conditions continue to be a very dominant feature of the market across the UK.'
Future: Rics also said that expectations for house price growth over the next three months rose as well, while the lettings market ‘picked up firmly’ in the three months to October
Nationwide warned on affordability, as it highlighted that homes now cost six times wages. It added that house sales were down 10 per cent on levels seen a year ago, which may 'in part' reflected April's stamp duty hike on buy-to-let and second homes.
The addition of a 3 per cent stamp duty surcharge for buy-to-lets saw a spike in sales at the start of the year, with a large number of transactions seemingly pulled forward to beat the deadline.
House prices are tipped to rise by Rics members in all areas except for London
Recent data on the property market has delivered a murky picture, with indications that the Brexit vote has not knocked confidence by as much as expected, but surveys showing signs of a slowdown.
The London property market, which had spent years setting the pace for the UK, has seen a marked cooling, although more affordable pockets of outer areas are still seeing robust activity.
The Rics survey showed an eighth consecutive monthly decline in London house prices, with 16 per cent more member agents reporting a fall than rise, although it said this tends to reflect better activity in inner London than outer boroughs.
The only other region to see prices fall in England and Wales was the North East, but only by a slight amount as 2 per cent more agents reporting falling rather than rising prices.
How house prices are forecast to rise between now and 2021, according to Savills
Estate agent Savills recently revealed its forecasts for house prices over the next five years, with the East tipped to see the biggest jump of 19 per cent, this was followed by the South East at 17 per cent. The lowest growth of 9 per cent was forecast for Scotland and the North East, while London was tipped to see prices rise by 11 per cent.
Howard Archer, chief economist at IHS Markit Global Insight, said earlier this week that UK house prices were likely to rise modestly in the near-term as the economy continued to show signs of resilience.
But he also believes house prices will come under increasing pressure as 2017 progresses and may dip modestly over the year, possibly by around 3 per cent.
Halifax’s housing economist, Martin Ellis said: 'Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels.'
Rics said that 18 per cent more of its members see house prices rising rather than falling over the next three months, while 43 per cent more saw a rise than fall over the next year. London remains the outlier, it said, with expectations that house prices will be flat.
Fewer homes being put up for sale has been a feature of the property market over the past few years, according to the Rics report