UK house prices are continuing to rise as a result of a continued shortage of new properties being listed for sale as new buyer enquiries increase.
The December 2021 Royal institution of Chartered Surveyors (RICS) UK Residential Market Survey showed that the number of new listings once again failed to keep up with demand over the Christmas period, a trend that ran over much of the second half of 2021, leading to agreed sales dropping.
The imbalance between demand and supply is underpinning growth in house prices. In December, 69% more respondents reported a rise in house prices, and 67% anticipate prices to rise over the coming year too.
“Despite the termination of the stamp duty break at end of September and the more recent increase in interest rates, the RICS new buyer enquiries indicator remained in positive territory into the year end,” said Simon Rubinsohn, RICS chief economist.
“Although respondents to the latest survey continue to highlight a lack of stock on the market, they do encouragingly still see some scope for transaction volumes to edge upwards over the coming months.”
Last month, 9% more respondents reported a rise in the number of new buyers looking for a property, the fourth consecutive report where there have been an increase.
Some 14% said a decline in new listings coming to their books was a major factor to the drop in newly agreed sales.
Read more: UK house prices climb 10% in November
As surveyors look ahead, 14% expect sales to return to growth over the coming three months and 16% expect sales to increase over the year ahead.
In the letting markets, there was strong growth in tenant demand in December, and another fall in the number of new listings. Over half of respondents expect further rent increases in the coming three months.
The suggestion that the mismatch between demand and supply will drive house prices even higher through the course of 2022 "is cause for concern", said Rubinsohn .
He said: “Rents similarly seem likely to be on an upward course over the next twelve months despite more broader cost of living challenges emerging on the back of higher energy costs.
“And significantly, the longer-term metrics capturing five-year expectations suggests the industry for now continues to anticipate prices and rents outpacing wage growth beyond the end of this year in the absence of a major uplift in new supply.”
This comes as the Office for National Statistics said the average UK house price saw double-digit growth in the year to November, gaining £25,000 ($34,038) when compared to the previous year.
Property prices in Britain rose 10% to £271,000 in the period, up from 9.8% in October thanks to cheap mortgage rates, the return on high loan-to-value mortgages, and a change in working habits.