A shortage of homes coming up for sale is continuing to drive property prices higher, fresh data has revealed.
Enquiries from buyers looking to move increased in December, but the average number of homes on estate agents’ books remains low, according to the Royal Institute of Chartered Surveyors’ latest survey.
The ‘mismatch’ between supply and demand looks set to drive house prices even higher in 2022, Simon Rubinsohn, chief economist at the Rics, warned.
On the up: Property prices have continued to rise amid a shortage of listings, the Rics said
He added: ‘Significantly, the longer-term metrics capturing five-year expectations suggest the industry for now continues to anticipate prices and rents outpacing wage growth beyond the end of this year, in the absence of a major uplift in new supply.’
It comes as some lenders appear to be on the brink of tightening their mortgage criteria for prospective buyers, amid the rising cost of living.
HSBC could alter the way it calculates the size of the mortgage households are able to borrow.
This would take into account the huge rises in energy bills in recent months, which have driven up outgoings for many households.
Sticking point: The number of homes coming up for sale remains low, the Rics said
Shifts: A chart showing fluctuating buyer enquiry levels in Britain since the year 2000
Expectations: The Rics said it expected property prices to keep rising in the year ahead
The survey takes into account the views of the Rics membership, which is made up of chartered surveyors.
The Rics said: ‘A headline net balance of -14 per cent of contributors noted a decline in new listings, thereby extending a sequence of negative readings for this metric into a ninth consecutive month.
‘Moreover, new instructions either fell or remained stagnant across all parts of the UK according to the latest data points.’
Agreed sales slipped in December, but a growing number of estate agents think levels will rise over the next few months, the survey found.
Ben Hudson, managing director of Hudson Moody estate agents in York, said: ‘The year has started well but a lack of new properties coming to market is holding back sales.’
Meanwhile, James Watts, of Robert Watts Estate Agents based in Bradford, said: ‘Sales figures are unreliable for December due to the holiday period but the level of demand is still significantly higher than supply and this is a trend that keeps exacerbating. This leads to a massive downward pressure on fees with agents desperate to get stock on the market.’
In terms of property prices, a net balance of +69 per cent of experts surveyed saw a further increase during December.
The Rics said: ‘This is virtually unchanged from last month’s reading of +71 per cent and remains consistent with a strong pace of house price inflation across the country as a whole.
‘All areas continue to see a strong uplift in prices, with momentum showing no indication of softening in the latest feedback.’
Looking ahead, the Rics said it expected property prices to remain ‘elevated’ by the end of the year. It added: ‘Again, all parts of the UK are anticipated to see a continued rise in house prices over the year ahead, with expectations particularity elevated in Scotland and the South West of England.’
House prices surged by 10 per cent annually in November, official figures published on Wednesday revealed, accelerating from 9.8 per cent growth in October.
Experts warned that, with general living costs such as energy bills also rocketing, it is imperative that buyers do not overstretch themselves when chasing their ‘dream home.’
Some also suggested that rising living costs could limit people’s confidence to buy a property.
The average UK house price in November was £271,000, which was £25,000 higher than a year earlier, the Office for National Statistics said.
In Scotland, the average house price hit a record level of £183,000 in November. Property values increased by 11.4 per cent over the year, accelerating from 11 per cent growth in October.
Average house prices increased over the year in England to £288,000 (9.8 per cent annual growth), in Wales to £200,000 (12.1 per cent), and in Northern Ireland to £159,000 (10.7 per cent).
Within England, the South West had the highest annual house price growth, with average prices increasing by 12.9 per cent in the year to November.
The lowest annual house price growth was in London, where average prices increased by 5.1 per cent annually.
Rental market: Landlord instructions ‘thin on the ground’
The Rics also posted an update on the lettings market today and revealed that demand from tenants continued to rise in December.
However, it said landlords seeking tenants ‘remained thin on the ground’, evidenced by 27 per cent more respondents noting a decline.
As a consequence of the persistent disparity between demand and available supply on the lettings market, near-term rental growth expectations rose further in December.
Rents are expected to pick-up firmly across all parts of the UK for the next 12 months.
Mr Rubinsohn said: ‘Rents seem likely to be on an upward course over the next twelve months despite more broader cost of living challenges emerging on the back of higher energy costs.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.