By CAMILLA CANOCCHI FOR THISISMONEY.CO.UK
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Buyers return to property market for first time in seven months as supply crunch props up prices
- Balance of 8% more surveyors reported an increase in buyer enquiries
- But supply declined for seventh month in a row
- Prices rose everywhere except London and the North East in September
Homebuyer demand has picked up for the first time in seven months as a paucity of properties for sale props up prices, according to a new survey.
In September, a balance of 8 per cent more estate agents reported an increase in buyer enquiries, compared to June, when a balance of 34 per cent of surveyors recorded a drop in demand. This is the first time since February that net demand has picked up.
The Royal Institution of Chartered Surveyors said the return of interest by property seekers was a sign that the market was settling down after the slowdown caused by the introduction of higher stamp duty and Brexit concerns.
Shortage of homes: Supply of new homes for sale continued to fall, pushing prices higher
But the number of new homes coming onto the market fell for the seventh straight month, with the imbalance between demand and supply expected to continue to drive prices higher.
‘In fact, with the exception of a few months around the turn of the year, the flow of new stock coming to market has dwindled continuously over the past two years,’ RICS said.
‘As such, average stock levels on estate agents books remain exceptionally low. Consequently, the imbalance between marginally increasing demand and a real lack of supply is firmly underpinning prices,’ it added.
A net balance of 17 per cent of surveyors saw house prices increase rather than decrease last month, compared to a 13 per cent balance in August.
Going up: House prices have risen in every region except for London, North East and Wales
Simon Rubinsohn, chief economist at Rics, said: ‘The market does now appear to be settling down following the significant headwinds encountered through the spring and summer.
‘Buyers do appear to be returning, albeit relatively slowly, but the big issue that continues to be highlighted by respondents is the lack of fresh stock on the market. Although this is not a new story, it is a significant one having ramifications for both prices and the level of turnover.’
rices rose in almost all regions over the past month, except for Central London and the North East, where surveyors saw a decline in property prices.
In the capital, where prices have become increasingly unaffordable over the past years, surveyors also expect them to fall in the coming months.
RICS said there was anecdotal evidence suggesting that uncertainty following the Brexit vote, as well as changes to the stamp duty in April, were having a negative impact on the top end of the market in particular.
But in the UK overall house prices are predicted to rise further, with a balance of 14 per cent of surveyors expecting to see an increase rather than a decrease.
This is the strongest expectation that house prices are set to increase in the near term since March.
Demand: Buyers returned to the market in September after summer ‘headwinds’
In the letting sector, demand for properties to rent increased at the fastest pace in twelve months, while landlord instructions were more or less unchanged, except for London and Wales, where they increased ‘notably’, RICS said.
‘London remains the only area in which rents are expected to come under pressure in the near term, while virtually all other areas are anticipated to chalk up solid gains.’