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Housing market constraints threaten economy, RICS warns

A combination of factors are predicted to take their toll on the housing market and wider economy at the start of 2017, according to a report by surveyors.

The Royal Institution of Chartered Surveyors (RICS) said that while strong demand for properties was currently driving price growth, this was expected to ease amid a lack of new homes for sale and higher property taxes.

The group's chief economist said this posed a threat to consumer spending levels - the current engine behind economic growth.

RICS' latest market report showed a net balance of 30% of surveyors reporting prices rising rather than falling in November - the strongest figure seen since April.

But it said that while new buyer enquiries were increasing, the lack of properties coming to market was set to combine with a growing number of sales to further dent choice across the UK.

RICS reported that the volume of new homes hitting estate agents was flat in November overall, with strong demand being the single factor behind the rising number of sales.

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The findings tally with other recent market surveys which have pointed to a recent pick-up in price growth following a post-EU referendum pause.

Halifax reported the strongest annual price growth since August at 6% for last month. It also noted continued demand support from low mortgage rates.

At the other end of the scale, changes to the structure of stamp duty have made the tax more expensive for
some people buying top-end homes while a hike for buy-to-let investors has also affected the market.

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The Government has responded to calls for more action on the building of new homes, with a series of measures announced before and in the Autumn Statement including cash to help accelerate the planning process.

Simon Rubinsohn, chief economist at RICS, said: "The combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest.

"This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases."