Economist says there is little evidence of house price inflation slowing down
More property professionals are reporting rising house prices rather than a fall, the latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) has shown.
In April, 80% more respondents said there was an increase in house prices than those that reported a fall, up from 74% in March. This percentage-point difference is the highest since June 2021.
They also expect house prices to continue rising, with a net balance of +62% predicting more price increases over the next 12 months.
The proportion of estate agents expecting rents to increase over the next three months, at +63%, was the highest since records began in 1999.
RICS said more respondents also reported a rise in new buyer enquiries rather than a fall, at a net balance of +10%. This was the eighth consecutive month in which the survey returned a positive net balance.
“Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer enquiries,” Tarrant Parsons, economist at RICS, said.
He further noted that limited supply available on the market, coupled with steady demand growth, were still the overriding drivers of house prices for the time being.
“As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming 12 months have only moderated slightly from recent highs,” Parsons pointed out.
“One lesson from the pandemic is not to expect normal service to resume overnight and so it is proving with the UK housing market,” Tom Bill, head of UK residential research at estate agency Knight Frank, remarked.
“Demand is now robust rather than fierce as the economic uncertainties mount, but supply remains stubbornly low, which is largely the result of a vicious circle that means owners are holding back from listing because they cannot find anywhere to buy themselves,” he said.
“Low supply is the rather unglamorous reason that prices have been so high over the last year, but we expect to see single-digit rather than double-digit annual growth by the end of the year as both stock levels and mortgage rates increase. While the cost-of-living squeeze will also intensify, we are not factoring in a recession,” Bill continued.
