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UK property prices keep rising even as more stock comes onto the market

The supply of property in the UK is increasing but the trend is not stifling prices, according to the latest survey to be published today. (Nov 10)

The number of surveyors reporting price increases has risen to their highest point since December 2006 with some 34% positive in October compared with 20% in September.

And it is London that is leading the real estate recovery with an astonishing 95% of surveyors reporting an upturn in prices, the highest figure since the end of 1996.

The survey from the Royal Institution of Chartered Surveyors also shows that vendors are returning a net balance of 15% of surveyors reported that new instructions had increased in October, compared to a 5% in September.

Significantly, all regions reported a rise in instructions for the first time since the onset of the credit crunch with the North, the South West and London leading the way, the report says.
Meanwhile, transaction levels continued to rise with sales per surveyor edging up to 19 over the past three months.

As a result, the sales to stock ratio, a measure of market slack and a lead indicator of future prices, climbed a little further.

It has now risen for ten consecutive months and stands at 30.

But the pace of improvement in buyer interest slowed for the fourth consecutive month.

The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries slipped from 35% in September to 31%.

However, only East Anglia is seeing a fall in buyer enquiries while buyer interest is strongest in London.

Looking ahead the outlook is positive.

‘Although the supply of property is beginning to pick-up, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term,’ said RICS spokesperson Jeremy Leaf.

‘Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders,’ he added.

The RICS housing market survey is the longest running monthly survey of house prices in the UK, collecting data since January 1978.

The survey is cited by the Bank of England's monetary policy committee at its monthly interest rate setting meetings.