House Prices Increase Due To Shortages

House prices increased in all regions of the UK in April, while new instructions fell, according to a new survey.

The research from the Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey, revealed that house prices rose last month as there was a decline in supply for the third month in a row, with new instructions now falling at their fastest rate since May 2009.

More than 33% of surveyors witnessed prices increases in April, while new instructions declined to a net balance of -21%. In addition, the flow of second-hand stock coming on to the market fell in most parts of the UK.

For the first time since August 2014, respondents reported an increase in prices in every area of the UK. This was said to be as a result of the shift in tone in the London market, where 28% more respondents saw prices increase. This compares to 6% more surveyors in March who saw house prices fall.

In the near term, prices and sales are expected to continue with relatively modest gains, but over the next 12 months, 72% of surveyors said they expect prices to increase. Looking at the lettings sector, there is no slowing in the growth of tenant demand, which is helping to underpin higher expectations for rents.

The survey reported that the trends being experienced may be due in part, to the uncertainty ahead of the General Election, but added that it is also a sign of "deeper underlying problems". The downward trend in owner-occupation rates across the UK, is a "visible sign that affordability constraints bite ever deeper, as does the squeeze on household budgets from higher rents."

Commenting on the survey, Jeremy Blackburn, RICS Head of UK Policy, said: "It is conceivable that the decisive outcome to the election could encourage a pick-up in instructions to agents and ease some of the recent upward pressure on house prices, but it is doubtful that this will be substantive enough to provide anything more than temporary relief.

"Alongside an increased flow of second hand stock, it is absolutely critical that the new government focuses on measures to boost the flow of new build. The affordability and availability of homes in the UK is now a national emergency and addressing this crisis must be the priority for the new government.

"We need a coherent and coordinated house building strategy across all tenures. This should include measures that will kick-start a supply-side revolution, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions."

(JP)