House prices driven higher by supply shortage
Thu 14 Nov 2013
Estate agents have warned that there are nowhere near enough homes on the market to satisfy would-be buyers, with the gap between demand and supply at its widest since May 2009.
The shortage has also contributed to an 11-year record in the proportion of estate agents reporting rising house prices, according to the Royal Institution of Chartered Surveyors.
Rics said "rocketing" interest from would-be buyers was dwarfing the number of properties being put up for sale as the state-backed Help to Buy and Funding for Lending schemes stoke interest in a rejuvenated housing market.
Its latest snapshot of the residential property market found that for England and Wales, the proportion of estate agents reporting rising prices minus those reporting falls – the net balance – had jumped to 57% in October, the highest figure since June 2002.
Simon Rubinsohn, chief economist at Rics, said a greater willingness by lenders to offer mortgages with smaller deposits meant more first-time buyers were able to enter the market. "In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand and in order for the market to function correctly this imbalance urgently needs to be addressed," he said. "Housebuilding starts have picked up recently but we are still well behind in terms of the amount of properties needed. If we are to create a more sustainable market, it is critical that many more good-quality homes are built in areas where people want to live."
Despite the discrepancy between demand and supply reaching a four-and-a-half-year peak, the number of homes being bought also saw a big jump last month. During the previous three months, each Rics participating member sold an average of 20.3 homes, the most since the start of 2008.
"Significantly, almost every region of the country saw transaction levels increase, which further demonstrates the recovery is spreading beyond the traditional economic powerhouse of London and the south-east," said Rics. But it added: "Surveyors across the country note that while Help to Buy is boosting buyer numbers, a lack of new instructions from vendors is proving problematic."
The organisation's respondents were optimistic that the "currently flourishing" market will continue, with prices expected to continue rising over the coming months. That prediction will delight those intending to sell soon, but will represent a setback for those trying to get their first foot on the property ladder.
The survey found prices were expected to rise by 3% nationally over the next 12 months – up from 2.6% last month – and by 4.5% a year for the next five years.
The Bank of England's Funding for Lending scheme, which passed its first anniversary in August, has been credited with triggering some of the record low mortgage rates on offer to certain buyers.
Source; The Guardian
October 2013View older stories >
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