Housing shortage set to drive up UK house prices

Estate agents currently have the lowest stock of homes for sale since records began in 1978.

Property prices look set to increase in the coming months on the back of a growing supply-demand imbalance, the latest poll of surveyors has revealed.

Fresh figures released by the Royal Institution of Chartered Surveyors (RICS) suggest that the housing market might continue ‘flatlining’ in the near term, but with the number of homes coming on to the market continuing to fall, there is every chance that property prices will rise across some parts of the country, as buyers are forced to compete for whatever housing stock is still available.

The number of new property instructions in June fell for the 16th consecutive month, while most surveyors also saw further falls in the number of properties being sold, with various reports suggesting that many vendors are choosing to withdraw homes from the market rather than sell for a price that they are not satisfied with.

The average number of homes on the books of estate agents fell to 42.5 in June – the lowest number since the survey started in January 1978, and this is likely to place upward pressure home prices in some parts of the country.

The northern hotspots of Manchester, Leeds and Birmingham, for example, are continuing to see strong house price growth and first-time buyer levels are up by 10% year-on-year – almost doubling from the market low in 2009.

A flattening in London is also not necessarily a bad thing, as the north-south divide begins to even out.

Political uncertainty has been identified by 44% of surveyors as the main reason for the slowdown in the housing market.

Simon Rubinsohn, chief economist at RICS, said: “Perhaps not surprisingly in the current environment, the term ‘uncertainty’ is featuring more heavily in the feedback we are receiving from professionals working in the sector.

“This seems to be exerting itself on transaction levels which are flatlining and may continue to do so for a while particularly given the ongoing challenge presented by the low level of stock on the market.”