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Lack of housing supply continues to fuel house prices, says RICS (17 August 2015)

Date: 17/08/2015
Duncan Lewis, Legal News Solicitors, Lack of housing supply continues to fuel house prices, says RICS

The latest RICS UK Residential Market Survey for July has found that house prices are continuing to rise due to continued demand and lack of stock.

The report’s authors say the trend is continuing because the government is failing “to tackle the elephant in the room” – housing supply.

The RICS Residential Market Survey is the longest running monthly survey of house prices in the UK – and has been collecting data since January 1978.

The Bank of England's monetary policy committee cites the survey at its monthly meetings, where the Base Rate is set.

The RICS (Royal Institution of Chartered Surveyors) survey uses net balance – the proportion of respondents reporting a rise in prices, minus those reporting a fall.

Online publisher 24dash.com reports that, in July, the RICS UK Residential Market Survey shows buyer demand is rising at the fastest pace since February 2014, with prices gaining momentum for a sixth consecutive month – and limited housing stock continuing to act as a restraint on both transactions and new instructions.

The report also predicts that all areas of the UK will see sizeable house price gains over the next 12 months – with East Anglia and Northern Ireland singled out for growth.

Overall, the survey says there is a 44% increase in the number of chartered surveyors who saw prices rise in July, compared with those who did not see any rise in prices in their area.

RICS head of policy, Jeremy Blackburn, said:

“This government has put homeownership at the very heart of its agenda –
with starter homes and extending Right to Buy the strongest evidence of that ambition.

“However, this continues to be demand driven and fails to address the real issue of supply.”

The average number of properties for sale per surveyor has dropped to a record low of 47 – and new vendor instructions have fallen a sixth consecutive month, with a net balance of 22% of contributors reporting a decrease.

The report states:

“Near term expectations for prices also continue to reflect the imbalance between demand and supply, with 41% of members expecting prices to continue to rise over the next three months.

“However, rising prices have not dampened interest, as new buyer enquiries rose for the fourth month in succession, with 25% of respondents reporting a rise in demand.

“Despite this steady and sustained improvement in demand, newly agreed sales were more or less unchanged at the national level in July.

“Going forward, there is a little more optimism regarding the prospects for activity, with 37% more respondents expecting sales to gain momentum over the next three months – and 40% more taking the same view on a one-year perspective.”

Mr Blackburn is calling for “a coherent and coordinated housebuilding strategy” across all tenures.

“This should include measures that will kick start the supply side – 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.

“The changes brought in through 'Fixing the Foundations' – the Chancellor’s productivity plan – were welcome and refreshingly on the supply side; such as zonal planning, dispute resolution for S106 and local plan enforcement.

“But these alone are not a strategy for increasing housing supply across all tenures.”
Duncan Lewis Housing Solicitors
Duncan Lewis housing solicitors can advise homebuyers on a wide range of housing issues and offer competitively priced conveyancing services, including guiding first-time buyers through the conveyancing process.

Duncan Lewis can also advise council tenants on Right to Buy – and offers specialist advice to homeowners on debt management and mortgage repossession.

For expert legal advice on housing and property law, call Duncan Lewis housing solicitors on 020 7923 4020.

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