House price growth accelerates as supply slows down – RICS

A slowdown in the supply of new homes in April has seen price growth accelerate across the UK, according to the latest RICS Residential Market Survey.

RICS reported that a lack of new properties to let has also put pressure on prospective renters.

In terms of new buyer demand, the survey revealed that a net balance of +44% of respondents saw enquiries pick up over April, which was relatively unchanged from the previous +43% in March.

However, RICS suggested that a lack of fresh listings was the biggest concern cited by respondents – with many saying it was not nearly enough to match the interest shown by potential buyers. Respondents reported that new instructions from owners looking to sell-up eased significantly, with the latest net balance of -4% marking a steep decrease from +21% in the previous month.

Furthermore, stock levels reported by estate agents dropped, with the average number of properties on their books now at 40, having stood at 46 in December 2020.

Therefore, the RICS survey highlighted that house price growth rose again in April – with a net balance of +75% noting an increase in prices at the headline UK level. This was up from +62% in March and the highest growth seen over the last three surveys conducted.

More respondents also predicted prices going upwards over the next quarter, with a net balance of +47% in April compared with +43% in March, and this increased to +68% when looking at the next year as a whole.

RICS chief economist, Simon Rubinsohn, commented: “Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey. While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low interest rate environment, an uplift in delivery does have a role to play.

“Planning reforms as outlined in The Queen’s Speech are likely to provide part of the answer although it is critical, particularly with regard to permitted development rights, that quality and safety are not compromised.

“Ensuring a broad range of tenures in the delivery pipeline is also important with anecdotal evidence from the survey emphasising a severe lack of stock in the private rental market as likely to drive up rents sharply over the next year.”

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