UK House Prices Being Driven by Increasing Demand, Tight Supply – Royal Institution of Chartered Surveyors
A dearth of supply abutting steady demand has caused housing prices within the UK to rise sharply, says the Royal Institution of Chartered Surveyors in its latest UK Residential Market Survey.
The survey found that buyer demand had remained steady and consistent across the UK, but that the number of fresh listings was ‘insufficient’.
Furthermore, the authors write, “The survey’s headline measure of house price growth rose again over the month, with a net balance of +75 per cent of respondents noting an increase in prices during April. This is up from a reading of +62 per cent back in March and has now become successively more elevated in each of the last three reports. Furthermore, all UK regions/countries are now seeing a sharp pick-up in house price inflation.”
There was much commentary across the industry on the report. Tahir Farooqui, CEO of Canopy, said: “There’s a risk that the property market is being artificially propped up by measures like the stamp duty holiday. While higher-earners and second steppers have got to swoop in on the buying frenzy and make the most of cut costs, sky-high house prices are making homeownership even further out of reach for hopeful first-time buyers. When the dust settles and the support schemes are taken away, securing an affordable mortgage will remain a pipedream for many.”
Farooqui said that there should be support for those trying to move from renting a property to buying one. One measure, he said, would be to make rent payments count towards a credit rating to help first-time buyers when it came time to purchase a property.
Others pointed to the stamp duty extension as being the catalyst for the current bullish market. Rich Horner, head of individual protection at MetLife, said: “The fear of missing out has placed immense power in the hands of sellers, with many listings being sold at inflated prices that would have been inconceivable a year ago. But the market knows that this level of activity and house price growth is not sustainable, it’s a question of when prices stabilise rather than if.”
A more-pessimistic view was held by others. Ross Counsell, chartered surveyor and director at GoodMove, said: “What does this mean for the rest of 2021? Over the coming months, we expect that as we draw closer to the Stamp Duty Holiday deadline in June, demand will remain strong and there will be a rush of buyers hoping to complete a house sale before the deadline. This will ultimately cause an even bigger imbalance between supply and demand and as a result house prices will inflate even further.”
Counsell added: “Looking further into the year, post-Stamp Duty Holiday, we stand by our predictions that house prices will begin to fall although the more long-term impacts of the pandemic on the economy and how this will impact the housing market remain rather uncertain.”