Lack of supply continues to push house prices upwards – RICS

House prices in the UK are continuing to rise as new listings fail to keep up with the number of interested buyers, according to new research from the Royal Institution of Chartered Surveyors (RICS).

The latest RICS UK Residential Market Survey for May showed that the number of people looking to buy a new home continued to climb, with 32% more respondents noting an increase from prospective buyers.

However, RICS also noted that housing supply cannot currently keep up with this increase in demand, as a net balance of -21% respondents reported another fall in the number of new listings being brought to the market.

This widening disparity between new buyer enquires and new instructions sees the gap at its widest since November 2013, which RICS described “a real mismatch”.

As the housing market continues to see the impact of buyers trying to beat the stamp duty holiday deadline, the findings showed that newly agreed sales rose again. This month, the RICS survey revealed that +30% of respondents reported an increase, but this figure was down from +47% in April.

“Ending a tax break always has the potential to be a little disruptive for a market, but with the economy performing better than could have been expected even a short while ago and the cost of money still at rock bottom levels, the principal drivers supporting demand will remain in place even after the expiry of the stamp duty holiday,” commented RICS chief economist, Simon Rubinsohn.

“More challenging is the question of supply, a theme coming back strongly from respondents to the survey both with regard to the sales and lettings markets.

“The government's planning reforms including the relaxation of permitted developments rights is clearly designed to address this problem but the jump in five-year expectations for prices and rents to their highest levels since the middle of the last decade suggests that there is a degree of scepticism about whether this approach will deliver a significant enough uplift in housebuilding numbers.”

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