Buyer demand in the UK has increased for a second month in a row but they may find that there is not enough choice as supply remains low, according to the latest residential analysis report.
The October monthly report from the Royal Institution of Chartered Surveyors (RICS) shows that across the country 10% more respondents reported rise in home buyer interest while the number of properties on the market dropped.
It also shows that while prices are reported to have risen at a national level with 23% more respondents seeing growth, up from 18 in September but those in central London report the eighth consecutive monthly drop in prices.
Indeed, 16% more respondents in the capital reported a fall rather than rise in prices and RICS says that this figure more closely reflects inner London rather than the outer boroughs, many of which are still seeing significant price growth.
More generally, 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.
‘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,’ said Simon Rubinsohn, RICS chief economist.
‘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,’ he added.
The report show that as activity recovers after the European Union referendum, agreed sales rose marginally across the UK with 5% more chartered surveyors seeing activity rise rather than fall in October. Expectations for the months to come have also improved with a net balance of 25% of respondents forecasting a rise in transaction levels across the UK as a whole with all regions reflecting this trend.
Projections for price growth over the next three months have also increased with 18% more respondents foreseeing a rise over the next three months rather than a fall. Price expectations are now positive in all areas of the UK over the near term except central London, where respondents predict prices will remain broadly flat in the near future.
At the 12 month horizon, the picture remains broadly unchanged from September with contributors forecasting a rise rather than a fall in prices with once again the high end London market the outlier.
In the lettings market, tenant demand picked up firmly in the three months to October with 29% more surveyors reporting a rise in enquiries, rather than a fall. Demand continues to outpace new supply in all areas apart from London, where for the second consecutive quarter, demand fell with a net balance of 15% of contributors seeing a decrease.
However, the report points out that sluggish demand in the capital is taking a toll on rent expectations and 12% more respondents predict a fall in rental values in the capital over the coming three months.
However, at the national level, expectations for rental growth picked up firmly with 34% more respondents forecasting a rise rather than a fall in the months to come, up from 15% in the three months to June.
