The imbalance of supply and demand in the housing market “will lead to even stronger price gains over the next 12 months” warns the Royal Institution of Chartered Surveyors.
“This trend could be brought to a halt when base rates do eventually begin to rise but the dovish tone to the latest Bank of England inflation report suggests the first move will come a little later than previously thought likely and that subsequent increases will be very gradual indeed”, says RICS chief economist Simon Rubinsohn.
The institution says the continued inability of the government to address the problem of new homes supply lies at the heart of the problem.
“A coherent and coordinated house building strategy is required across all tenures. This should include measures that will kick-start the supply-side, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions” explains RICS’ head of policy, Jeremy Blackburn.
RICS says a famine of homes for sale shows no sign of changing in the immediate future, with the number of properties coming to the market falling for six successive months while the number of new buyer inquiries has been increasing for four months.
Each RICS member now has an average of just 47 homes on sale, with new listings down in nine out of 12 regions – East Anglia has seen the sharpest fall.
RICS is warning that there is now a “vicious cycle, as the limited choice on offer is deterring would-be movers and therefore further restricting new instructions”.