Yahoo Finance UK house prices keep rising as property market faces supply drought
The UK housing market is going through a drought, with new listings falling further in November, according to the latest residential market survey from the Royal Institute of Chartered Surveyors (RICS).
The decline in fresh properties coming to market is holding back activity, despite new buyer enquiries rising by 13% in November, and agreed sales were down by 9%.
Respondents noted a decline in new listings for the eighth month in a row. Additionally, the volume of home appraisals in November was 20% lower than the same month last year.
The lack of available housing stock on the market is driving competition amongst would-be buyers, causing house prices to continue to rise.
The average UK property price reached a new record high of £272,992 ($362,708) in November, according to Halifax’s recent house price index.
House price inflation has remained consistently strong during the past four months, according to RICS.
Leading the way, Wales, the North West of England and the West Midlands all displayed particularly strong house price growth.
Even though house price growth in London appears to be lagging the rest of the country to a certain degree, the latest net balance of 51% is still well above the long run average of 12% in the capital, according to RICS.
Two thirds (66%) of respondents said they expect house prices to continue to rise over the next year.
November saw another monthly rise in tenant demand in the lettings market. Rents are forecast to increase "firmly" over the near term due to the imbalance between rising demand and dwindling supply.
Rents are expected to rise by 4% across the UK for the next year, with rental growth averaging roughly 5% per year for the next five years, according to respondents to the RICS survey.
“The issue of supply is gathering ever more importance in the feedback to the RICS Residential Market survey. Critically, the theme runs strongly both through the latest set of contributor comments as well as the data around new instructions and the decline in inventory on agents books," said Simon Rubinsohn, RICS chief economist.
Read more: Top eight most expensive properties on the UK market right now
“Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant than any shift in the interest rate environment for new buyers.
“The imbalance compared to the demand trend is, meanwhile, likely to continue to be a key factor supporting prices and indeed, even if the cost of mortgage finance does begin to edge up, it is likely that house prices will continue to move higher through the coming year, albeit at a somewhat slower pace than over the past twelve months.”
