Lack of new listings fuels house price inflation, says RICS

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Homes are not coming to the market quickly enough to satisfy demand, according to surveyors

A shortage of properties being listed for sale continues to hold back house sales as enquiries rise, according to the Royal Institution of Chartered Surveyors.

RICS’ latest UK Residential Market Survey of surveyors shows a net balance of +9% of respondents in reported a rise in the number of new buyers looking for a property in December. This is the fourth consecutive month where RICS has seen an increase.

However more surveyors in December reported a drop in new listings on their books than increases, with a net balance of -14%. This was a “major factor” in a net balance of -13% respondents reporting a drop in newly agreed sales, according to RICS.

When it comes to house prices a net balance of +69% of surveyors reported a rise in houses prices in December, with +67% anticipating further increases in 2022.

RICS UK Residential Market Survey explained

The RICS UK Residential Market Survey is a monthly sentiment survey of chartered surveyors who operate in the residential sales and lettings markets. Surveyors are asked 18 questions on a range of metrics such as sales, enquiries, listings and house prices and are simply asked whether these have increased, stayed the same or decreased.

The ‘net balance’ refers to the proportion of respondents reporting a rise in a metric minus those reporting a fall.

For example, if 30% reported an increase in buyer enquiries and 5% reported a fall, the net balance would be +25%.

Simon Rubinsohn chief economist at RICS, said: “Despite the termination of the stamp duty break at end of September and the more recent increase in interest rates, the RICS new buyer enquiries indicator remained in positive territory into the year end.

“Although respondents to the latest survey continue to highlight a lack of stock on the market, they do encouragingly still see some scope for transaction volumes to edge upwards over the coming months.

Rubinsohn added: “More of a concern is the suggestion that the mismatch between demand and supply will drive house prices even higher through the course of 2022. Rents similarly seem likely to be on an upward course over the next twelve months despite more broader cost of living challenges emerging on the back of higher energy costs.

“And significantly, the longer-term metrics capturing five-year expectations suggests the industry for now continues to anticipate prices and rents outpacing wage growth beyond the end of this year in the absence of a major uplift in new supply.”

Responding to the figures, Tom Bill head of UK residential research at Knight Frank, said: “A supply squeeze is not the most exciting explanation for the strong house price growth seen during the pandemic but it is arguably the most important.

“Households have saved more, mortgage rates have been rock-bottom and there has been a ‘race for space’ but without such low supply and high demand, it’s doubtful we would have witnessed double-digit price growth last year”.