Shortage of UK houses for sale drives up prices

·3-min read
In the rental market, tenant demand accelerated over the month of June. Photo: Getty Images
In the rental market, tenant demand accelerated over the month of June. Photo: Getty Images

The housing market has seen an increase in demand but supply is “continuing to falter”, leading to a hike in prices, new data revealed.

The Royal Institution of Chartered Surveyors' new report said the housing market saw a third consecutive fall in the number of new properties coming onto the market.

Surveyors across the UK reported a decrease in new property listings, with the net balance standing at -34% in June, down from -24% in May.

“With demand increasing and supply continuing to falter, it’s no surprise this has had an upward effect on house prices, with a net balance of 83% of respondents reporting an increase,” the report said.

All parts of the UK continued to report “robust” increases, particularly in Yorkshire & the Humber, Northern Ireland and Wales.

Meanwhile, the rate of new enquiries from potential house buyers appears to be moderating – with the net balance of respondents seeing an increase in June easing to 14%, down from 43% in April.

This is happening across all regions of the UK, as the stamp duty holiday came to an end of 30 June.

The threshold for stamp duty, a tax on property transactions in England and Northern Ireland, was at £500,000 ($690,669) until 30 June for residential purchases. This was initially supposed to end in March but the government extended it.

Looking ahead, a net balance of 56% respondents anticipated that prices will continue to increase over the next 12 months at the national level.

Read more: UK house prices fall for the first time since January as stamp duty holiday ends

In the rental market, tenant demand accelerated over the month of June, with a net balance of 60% noting a rise, up from 48% in May.

Respondents anticipated rental growth will increase slightly as a result.

“Respondents to the latest RICS survey are pretty unanimous in once again highlighting the challenge around supply, whether in the sales or rental markets,” said Simon Rubinsohn, RICS chief economist.

“While the role of the credit channel and the extended period of ultra-low interest rates can’t be ignored, it is critical the government is able to create the conditions to support higher levels of new-build development to address the worsening affordability challenge.”

Earlier in the week a report from lender Halifax said the average UK house price slipped by 0.5% in June, the first monthly fall since January.

“It’s barely a week since the Nationwide reported that annual price inflation rose to 13.4% in June, so for the Halifax’s reading to be so far adrift, and heading in the opposite direction, does suggest that the rate of price rises may have finally topped out," said Jonathan Hopper, CEO of Garrington Property Finders.

“But prices are still climbing, and that’s not the same as saying buyer demand has peaked. Tens of thousands of buyers remain as keen as ever to buy, even without the prospect of a stamp duty saving."

Watch: Why are house prices rising during a recession?