Residential property prices look set to increase further this year, as demand from buyers continues to heavily outstrip the supply of homes coming on to the market, the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.
The report shows that while 44 per cent more chartered surveyors saw prices rise in July, the supply of homes coming onto the market continued the drop with 22 per cent more surveyors reporting a decline in fresh instructions.
Furthermore, the shortage of housing inventory worsened further during July, with the average volume of homes for sale per surveyor falling to an all-time low. As a result, all areas of the UK are now expected to witness property price growth over the next 12 months, with the greatest level of confidence currently being seen in East Anglia and Northern Ireland.
RICS expect home prices to be pushed higher on the back of the growing supply-demand imbalance, with 41 per cent of members expecting prices to continue to appreciate over the next three months.
Increasing prices does not appear to have deterred buyer interest, with new purchaser enquiries growing for the fourth consecutive month, with 25 per cent of respondents reporting a rise in demand. Despite the improvement in demand, newly agreed sales were more or less unchanged at the national level in July.
Jeremy Blackburn (left), RICS Head of Policy, commended the Government for putting homeownership at the “very heart of its agenda”, with Starter Homes and extending Right to Buy the strongest evidence of that ambition. However, he said that this continues to be demand driven and fails to address the real issue of supply.
He commented, “A coherent and coordinated house building strategy is required across all tenures. This should include measures that will kick start the supply side, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions.”
“The changes brought in through Fixing the Foundations, the Chancellor’s productivity plan, were welcome and refreshingly on the supply side, such as zonal planning, dispute resolution for S106 and local plan enforcement. But these alone are not a strategy for increasing housing supply across all tenures,” he added.
Blackburn also highlighted a growing supply-demand imbalance in the letting market as the main reason that 34 per cent of respondents expect to see rents to increase right across the UK.
The latest property supply index from online estate agent House Simple, which used new listings on Rightmove in July compared to the previous month of more than 100 major towns and cities and all 32 London boroughs, also shows that the number of new property listings continued to fall in July.
The index revealed that the volume of UK home owners putting their properties on the market fell by 13.2 per cent across the UK, with most locations having seen new stock levels fall in the past month.
“Any hope that sellers were finally returning to the market seems to have been a vain one for the time being,” said Alex Gosling (right), Chief Executive of House Simple. “It’s a very attractive market right now for motivated sellers.”