U.K. House Prices Pushed Higher by Dwindling Supply, RICS Says

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U.K. house prices are likely to head higher after the number estate agents seeing new properties come onto the market dropped sharply for a third month, a survey showed.

The Royal Institution of Chartered Surveyors said that all parts of the U.K. are seeing continued gains, with the strongest increases in northern England and Wales. The figures for June confirm reports from mortgage lenders showing momentum in Britain’s property market despite the worst recession in three centuries.

A net balance of 83% of property appraisers surveyed for the report saw an increase in prices in June, little changed from the reading the month before. The figures confirm a report from Nationwide Building Society showing the strongest increase in prices since 2004 last month and more forward-looking indicators like mortgage approvals showing strength in the market.

Buyers have bid up prices in an effort to secure more space after 16 months of pandemic lockdowns fed expectations that working from home will become more common. Prices grew quickest for houses and property in Yorkshire & the Humber, Northern Ireland and Wales. The outlook for the next year was “more modest” for areas like London and for apartments, RICS said.

Real estate agents reported a rush to complete sales before the end of a tax break on purchases, which started winding down on July 1. This took some momentum out of the June figures, with many buyers accepting they will not meet the deadline for the full exemption.

“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,” said Simon Rubinsohn, chief economist at RICS.

Here’s a roundup of comments made by agents in the RICS survey:

James Watts -- Robert Watts in West Yorkshire

“The market has cooled slightly over the past month or so in terms of viewing numbers, offers submitted and level of offers. We feel this is due to the Stamp Duty holiday ending but lack of stock is still driving prices upwards.”

Mark Newton -- Newton Fallowell in Lincolnshire

“We threw away the record books in June with the best ever month for exchanges. Conversely instructions down on last year and the challenge for the second half of the year.”

Robert Green -- John D Wood & Co. in Chelsea

“Buyer numbers did not pick up as expected after Easter, but those looking are serious and so a good volume of business is being done. Family houses most in demand, overseas buyers still away due to travel restrictions. New instructions limited. (tax) holiday less of a factor here.”

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