British property valuers reported sustained price increases in November and a record shortage of houses to sell, but expressed some hope that incentives for first-time buyers would lead to more sales in the coming months.
The Royal Institution of Chartered Surveyors said on Thursday that its house price balance slipped to +49 in November from an upwardly revised +50 in October. The index touched its highest level in over a year in August at +53.
High demand for property is not leading to greater supply, however. The number of homes for sale per surveyor fell to a fresh record low last month, and fewer properties were coming on to the market.
“I can’t recall a set of comments … which have so frequently drawn attention to lack of stock on the market. Given this, it is hard not to envisage prices continuing to climb upwards,” RICS economist Simon Rubinsohn said.
Official figures showed that house prices grew 6.1 percent in the year to September, and last week major mortgage lender Halifax forecast they could rise almost as much again in 2016.
House prices were rising more slowly in London, where RICS said the rate of increase slowed for a fourth month, as last year’s hike in transaction taxes for sales worth over 937,000 pounds weighed on the top end of the market.
Most economists agree that Britain’s housing market suffers from a long-term lack of new house-building, especially in southern England, driven by a mix of planning constraints and shortages of skills and finance.
In a half-yearly budget statement last month, Chancellor George Osborne said he would subsidise builders to sell 200,000 new homes over the next five years at 20 percent below market value.
First-time buyers in London will get access to larger subsidised loans, and loans would also be given to people buying a fraction of a property and renting the rest.
RICS said that this had prompted its members to predict the biggest rise in sales in more than two years, and initially at least this would lead to higher prices, not more construction.
“With the best will in the world, it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline,” Rubinsohn said.