UK house prices pushed higher by dwindling supply: survey

London

UK HOUSE prices are likely to head higher after the number of estate agents seeing new properties come onto the market dropped sharply for a third month, a survey showed.

The Royal Institution of Chartered Surveyors said that all parts of the UK are seeing continued gains, with the strongest increases in northern England and Wales.

The figures for June confirm reports from mortgage lenders showing momentum in Britain's property market despite the worst recession in three centuries.

RICS said its main house price balance - a measure of the proportion of its members reporting price rises over the past three months - rose to +83 in June from a downwardly revised +82 in May.

This was the index's highest reading since 1988 and bucked forecasts for a fall to +77 in a Reuters poll of economists. However, the balance for new listings dropped to -34 from May's -24, and growth in buyer inquiries slowed to +14.

The figures confirm a report from Nationwide Building Society showing the strongest increase in prices since 2004 last month and more forward-looking indicators like mortgage approvals showing strength in the market.

"This is happening across all regions of the UK, coinciding with the stamp duty holiday beginning to taper off," RICS said.

Buyers have bid up prices in an effort to secure more space after 16 months of pandemic lockdowns fed expectations that working from home will become more common. Prices grew quickest for houses and property in Yorkshire & the Humber, Northern Ireland and Wales.

The outlook for the next year was "more modest" for areas like London and for apartments, RICS said.

Real estate agents reported a rush to complete sales before the end of a tax break on purchases, which started winding down on July 1. This took some momentum out of the June figures, with many buyers accepting they will not meet the deadline for the full exemption.

RICS said its members expected sales volumes to fall slightly over the coming months. But most thought house prices would be higher in a year's time as demand for property continued to outstrip supply, worsening affordability.

"While the role of the credit channel and the extended period of ultra-low interest rates can't be ignored, it is critical the government is able to create the conditions to support higher levels of new-build development," RICS chief economist Simon Rubinsohn said. BLOOMBERG, REUTERS