Lack of supply continues to fuel house price rises – RICS

The number of people in Britain putting their home up for sale fell for the eighth month in a row in November, placing further pressure on house prices, the Royal Institution of Chartered Surveyors (RICS) has said.

RICS monthly house price balance held at +71 in November after an upward revision to October’s reading, not far from the 33-year high of +82 recorded in June.

RICS said the continuing drought in new listings was a significant factor holding back the market nationwide.

Simon Rubinsohn, chief economist at RICS, said: “Even if the cost of mortgage finance does begin to edge up, it is likely that house prices will continue to move higher through the coming year, albeit at a somewhat slower pace than over the past 12 months.”

Tomer Aboody, director of property lender MT Finance, added: “The basic rule of supply and demand has never been more evident than in today’s climate, with multiple buyers for most homes pushing prices further upwards. This trend will continue in the months ahead whether interest rates rise or not, since buyers are ready, willing and pushing to buy.

“Can more sellers be encouraged to sell? Possibly. There is a strong argument for reforming the stamp duty structure for downsizers in order to encourage more sales.

“Many of the older generations may be staying put in their homes because they do not wish to pay excessive tax costs via stamp duty, money they would rather pass onto their children. Removing or reducing their stamp duty would nudge them into action, freeing up more homes for family buyers.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: ‘We do not expect to see any correction in property prices anytime soon as the historically-accurate RICS survey confirms the findings of others, as well as what we are seeing at the coalface. 

“Prices continue to be underpinned and transactions constrained by lack of stock while demand shows little sign of easing despite concerns over the spread of the Omicron variant and a rise in interest rates. 

“If anything, further movement restrictions will probably only contribute to another build-up of pent-up demand as some downsizers in particular sit on their hands. 

“Our recent uptick in market appraisals and anticipation of the usual Boxing Day online property fest gives us hope that more balance will return in early 2022.”