UK house prices jump on supply crunch

UK house prices jump on supply crunch
Despite a 10% rise in the number of new enquiries, estate agents only have an average of 37 properties on their books, the figures showed. Photo: Getty

House prices in the UK continued to rise in October due to lack of new properties listed for sale.

According to the Royal Institution of Chartered Surveyors (RICS) UK residential market survey, 70% of respondents saw a rise in property prices, with the trend expected to continue over the next three months, and year ahead.

Despite a 10% rise in the number of new enquiries, estate agents only have an average of 37 properties on their books, the figures showed. Meanwhile, 20% of contributors reported a fall in the number of new properties being listed for sale.

“This is not only impacting on sales activity but is a significant factor behind current house price rises,” RICS said.

Although the results pointed to a dip in the volume of sales agreed over the month, it highlighted that demand was picking up slightly.

Read more: UK house prices could surge as fewer properties come on market

The survey, of chartered surveyors who operate in the residential sales and lettings markets, added extra questions to the October list in order to gauge consumers’ willingness to reduce their home’s carbon emissions, and its impact on the market.

It found that around one-third of surveyors saw an uptick in demand for energy efficient homes, however, cost was the main barrier for current homeowners to make energy efficiency improvements.

More than three-quarters saw little to no impact of having an energy efficient property on sale prices, however, 62% of respondents anticipated that demand would improve over the coming three years.

The survey sample covered a total of 510 branches coming from 295 responses.

Read more: Value of UK homes soar by £1.6tn in five years

“The inventory on agents’ books appears to have slipped back towards historic lows and this seems to be underpinning both the current price trend and expectations for the next year,” Simon Rubinsohn, RICS chief economist said.

“Meanwhile, although there is likely to be some drop in activity in the immediate aftermath of the expiry of the stamp duty break, most activity indicators currently remain solid. Indeed, the main challenge for buyers looking forward may once again be a lack of choice of property on the market.”

Last month marked the first after the end of the stamp duty holiday, a tax break designed to prop up the housing market and help consumers as the economy contracted during the COVID-19 lockdowns.

The holiday was extended from 31 March 2021 to the end of June and once more, tapering from June to the end of September as people rushed to market.

Housebuyers could have cashed in on savings of up to £15,000 ($20,230) if they bought at the right time.

The break caused a frenzy in the market, with many using it as an excuse to make long-awaited moves or buy for the first time.

However, some said that with climbing house prices over the past year the discount was quickly priced in and that it "distorted" the market.

Watch: Why are house prices rising?