There is “little evidence” that the pace of house price growth is losing much momentum, despite surging living costs, according to surveyors.
A limited supply of available properties and a steady growth in demand from buyers remain the overriding drivers of house prices, the Royal Institution of Chartered Surveyors (Rics) said.
House prices have recently soared to a string of record highs, despite the tough economic conditions caused by the coronavirus pandemic as well as the cost-of-living crisis, with inflation expected to hit 10% later this year.
Rics’ survey of property professionals in April found a net balance of 10% reported a rise in new buyers’ inquiries rather than a fall. It marked the eighth month in a row in which the survey returned a positive net balance.
But looking at the supply of available homes, slightly more professionals reported a fall in new property listings compared with those who reported increases in new listings in April. Overall, this indicated a flat trend in new homes coming on the market.
The number of agreed sales was also broadly flat in April, having increased for the previous two months. Sales are expected to remain flat when looking to the year ahead.
Due to the imbalance between demand and supply, stock levels remain extremely low, averaging 38 properties per agency, Rics said.
The number of appraisals being undertaken is also little changed compared with 12 months earlier, which does not seem to bode well for the flow of supply, the report added.
Some 80% of professionals reported an increase in house prices in April, up from 74% in March.
Surveyors expect prices to continue to rise. Looking forward to the next year, 62% anticipate price increases, although this is down from 78% in the February survey.
The number of available properties to rent is also edging down, as demand from renters increases.
The long-standing imbalance between supply and demand means that rents are once again expected to rise. Significantly, 63% expect rents to rise in the next three months – the highest proportion since records started in 1999.
Rics economist Tarrant Parsons said: “Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer inquiries.
“For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices.
“As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming 12 months have only moderated slightly from recent highs.”