UK prices still going up due to chronic lack of supply, reports show

Residential property prices in the UK rose 2.6% in the three months to the end of August, according to the latest figures released by the government.

The Department for Communities and Local Government (DCLG) said UK house prices had risen by 0.5% on average in August alone, and over the quarter to the end of the month were up 2.6%.

The figures are released as the latest report from the Royal Institution of Chartered Surveyors (RICS) shows that its headline house price balance has grown to its highest level since the autumn of 2007.

The Rics report also points out that a lack of properties up for sale has resulted in the strongest rise in house prices since the start of the credit crunch.

Almost a quarter, some 22%, more surveyors thought prices gained rather than declined during September and this represents the highest proportion since May 2007.

‘A lack of supply is still underpinning the rise in house prices with new instructions to estate agents only edging up very gradually.

Meanwhile, despite the problems first-time buyers are continuing to encounter in securing finance, the level of enquiries from potential purchasers is increasing,’ said Rics spokesman Ian Perry.

‘This imbalance between demand and supply suggests that house prices will move higher in the near term,’ Perry added.

The situation is quite different though in certain regions as the improvement is being led by London where 79% more surveyors reported price rises than falls.

Overall the South East is extremely buoyant where more than half, some 52% of surveyors reporting increases rather than declines.

However, in Wales, Yorkshire and Humberside, more surveyors reported price falls than rises.
At the same time there is no improvement in lending which real estate experts say is needed for a sustainable property recovery in the UK.

The latest figures from the Council of Mortgage Lenders (CML) actually show a fall in the number of home loans in August.

According to the CML loans were down 5% in august compared with July although lending is still some 30% up on the same period last year.