Housing supply

Drought UK housing supply dampens market

House price inflation has remained consistently high over the past four months, according to RICS. Photo: Getty

The UK housing market is going through a dry spell, with new listings falling in November, according to the latest residential market survey from the Royal Institute of Chartered Surveyors (RICS).

A drop in the number of new properties coming on the market is dampening activity, despite a 13% increase in inquiries from new buyers in November and a 9% drop in agreed sales.

Respondents noted a drop in new registrations for the eighth consecutive month. In addition, the volume of home appraisals in November was 20% lower than the same month last year.

The lack of available housing on the market stimulates competition between potential buyers, which leads to a further increase in housing prices.

The average UK house price hit a new record high of £272,992 ($362,708) in November, according to the recent Halifax House Price Index.

House price inflation has remained consistently high over the past four months, according to RICS.

Leading the way were Wales, the North West of England and the West Midlands all showing particularly strong house price growth.

Regional distribution of house prices over the last three months.  Chart: RICS

Regional distribution of house prices over the last three months. Chart: RICS

Even though house price growth in London appears to be lagging behind the rest of the country, the latest net balance of 51% is still well above the long-term average of 12% in the capital, according to the RICS.

Two-thirds (66%) of respondents said they expect house prices to continue to rise over the next year.

November saw a further monthly increase in demand from tenants in the rental market. Rents are expected to rise “firmly” in the near term due to the imbalance between rising demand and falling supply.

According to RICS survey respondents, rents are expected to rise by 4% in the UK over the next year, with average rent growth of around 5% per year over the next five years.

“The issue of supply is becoming increasingly important in the feedback from the RICS Residential Market survey. Critically, the theme is strongly present in both the latest set of contributor comments as well as data regarding new instructions and falling stocks on agent books, said Simon Rubinsohn, chief economist at the RICS.

Read more: The eight most expensive properties on the UK market right now

“Unless this trend reverses soon, transaction levels could stagnate in 2022, with limited choice proving more important than any change in the interest rate environment for first-time buyers.

“The imbalance against the demand trend is, meanwhile, likely to continue to be a key support factor for prices and indeed, even if the cost of mortgage funding starts to rise slightly, prices are likely to prices will continue to rise through the coming year, although at a somewhat slower pace than over the past twelve months.

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