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House Prices Continue to Climb

The UK has seen house prices rise for the third consecutive month, according to the latest Residential Market Survey from RICS.

In October, 49% more chartered surveyors saw house prices rise across the UK, compared to 44% more in September. RICS believes that UK house prices will rise by 4.5% per annum over the next five years (a cumulative increase of around 25%).

Contributing to the rise in prices across the country, demand from potential buyers grew across the UK in October, with 12% more respondents seeing a rise in new buyer enquiries. Demand continues to considerably outpace supply and the number of new instructions has decreased for the ninth month in succession, with 10% more chartered surveyors reporting a fall.

The supply of new stock to the UK market has been in decline since the middle of 2014, says RICS, with the number of new instructions only increasing in one of these months.

Despite the lack of new stock to the market, sales activity is apparently relatively healthy and following a small pick-up in agreed sales in September, activity was little changed this month across the UK.

In the UK lettings market, demand also continued to outpace supply in the three months to October. This has been the trend nationally for some time, with the growth in demand outstripping that of supply since 2009. Unsurprisingly, rental expectations remain strong and respondents continue to expect rents to rise over the year ahead. Rental growth is anticipated to accelerate to an average of just under 5% per year over the coming five years.

“It is hard to get away from the issue of supply when it comes to the current state of the housing market,” commented Simon Rubinsohn, RICS Chief Economist. “The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month by month basis.”

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