Page last updated at 11:00 GMT, Tuesday, 15 December 2009

House prices rise as property shortage persists

For Sale signs
Prices will probably keep on rising, Rics suggests

House prices are still being driven up by a relative shortage of properties for sale, says the Royal Institution of Chartered Surveyors (Rics).

Its latest monthly survey, for November, suggests that prices have risen for the fourth month in a row.

The number of surveyors reporting price rises outstripped those reporting falls, with a positive balance of 35%.

Separate government figures showed that UK house prices rose by 2.3% in the three months to October.

Supply shortage

Rics carries out its assessment of the state of the market by asking its members a series of questions about prices, supply and demand.

It still indicative of an increasing level of buyer interest in the market
Royal Institution of Chartered Surveyors

It said the latest figures were the strongest reading since November 2006 and said the trend was likely to continue.

"For the fourth month in a row, the survey points towards prices rising, even though the general state of the economy would suggest that the housing market should not be faring as well as it is," said Rics spokesman Ian Perry.

"Despite modest increases in the number of properties coming on to the market, it is clear that this is not significant enough to keep pace with the levels of demand.

"Buyer enquiries are continuing to grow and with the pace of job losses now easing, the risk is that the new year could see a further wave of interest in the market," he added.

New instructions to sell have risen for six consecutive months, but they have been outstripped by extra enquiries from potential new buyers.

'Modest pace'

The proportion of surveyors reporting an increase in new sellers instructions outweighed those reporting a fall, by 18%.

House keys
Prices are rising fastest in London and the south-east of England

But the balance in favour of those reporting more enquiries from potential new buyers was much stronger at 28%, although this was down a bit from the 30% balance recorded the previous month in October.

"It is still indicative of an increasing level of buyer interest in the market," Rics said.

"The implication of the latest set of results is that fresh supply of stock is continuing to lag behind the increase in demand.

"[This] provides further evidence that most housing market activity indicators continue to improve, albeit at a more modest pace than in previous months," Rics added.

Once again prices seem to be rising fastest in London and the south-east of England.

"This month has seen an increase in genuine applicants wishing to purchase resulting in a larger volume of sales," said Stephen Whitley of surveyors R. Whitley in West Drayton.

John King, of surveyors Quinton Scott in Wimbledon, said: "The high level of buyer enquiries covering a wide price range has increased sale activity only held back by the lack of stock."

Price survey

In a separate survey, figures from the Department for Communities and Local Government showed that UK house prices were 2.2% lower in October than the same month a year earlier, but 0.5% higher than in September 2009.

This pushed up the price of the average UK home to £198,450.

The uplift in prices has pushed the annual change in Scotland into positive territory. Year-on-year prices rose by 0.7% in Scotland, compared with falls of 2.1% in England, 4.5% in Wales, and 14.8% in Northern Ireland.

Annual average house prices paid by first-time buyers in October 2009 were 0.1% lower than a year ago. However, average house prices paid by former owner-occupiers were 3% lower.

"The property market does not exist in a vacuum and cannot disconnect entirely from its immediate environment," said Catherine Penman, head of research at property consultancy Carter Jonas.

"Prices are likely to remain stable in 2010, especially prior to the general election, when caution will remain the watchword. Certain properties, however, will continue to defy market conditions and sell well, in many cases at 2007 levels."

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