UK house price growth reaches 11 month high, says RICS survey
House price growth in the UK increased again in June, reaching an 11 month high, according to the latest market report from the Royal Institution of Chartered Surveyors (RICS).
It comes at a time when market supply is falling with the survey showing average stock of houses per surveyor has fallen to its lowest since RICS began collecting the data in 1978.
The survey also reports that buyer demand has increased in all parts of the UK expect the South East despite a more cautious attitude from lenders. It is the second month in a row that demand has risen.
RICS says that one reason for the slight recovery in buyer enquiries is likely to have been a further drop in mortgage rates which is accompanying the ongoing strength of the labour market.
The data also shows that 41% more surveyors expect house prices to rise over the next three months, which is the highest proportion since April 2014 and 36% more surveyors expect sales to increase despite the broadly flat trend in newly agreed sales.
Across the rental sector, the demand and supply imbalance is also visible and instructions, which have been broadly unchanged for the past couple of years and show no signs of a material increase, are at growing odds with the rising demand that is putting further upward pressure on rents.
‘Although much of the discussion about supply shortages has focused on the owner occupier market, the survey demonstrates in no uncertain terms that the issue, at least at a headline level, is just as visible in the rental sector. This is most clearly reflected in both the house price and rental projections over the medium term which comfortably exceeds the likely growth in wages,’ said Simon Rubinsohn, RICS chief economist.
‘There had been some hope that the removal of political uncertainty following the general election would encourage more properties onto the market but the initial indications are that this is not proving to be the case,’ he explained.
‘Additionally, the recent flat pattern of appraisals by respondents to the survey suggests this is not about to change anytime soon As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable,’ he added.
According to Jeremy Blackburn, RICS head of policy, pointed out that the government has its sights set on a long term project to drive owner occupation and property owning but the monthly survey shows that it is not just in this area where there is a marked shortfall in supply.
‘Just as significant is the pressure that is clearly building across the rental sector, through which a large part of our population is housed. It is particularly important for the younger more mobile workforce that it is central to improving our economic productivity,’ he said.
He also pointed out that the housing benefit cuts announced the Budget will push many out of the Private Rented Sector (PRS) and towards social housing, at a time when councils and housing associations are already constrained and the extension of Right to Buy will take further units out of supply. He added that there needs to be a more coherent and co-ordinated strategy to increase housing supply across all tenures.