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U.K. house prices kept rising through October as a lack of new properties on the market outweighed all other factors that are likely to weigh on consumers in the months ahead.
The Royal Institution of Chartered Surveyors said the trend is expected to continue over the coming year, even though economic growth is cooling and the Bank of England has warned that interest rates will rise in the coming months.
“Although the mood music around interest rates does appear to be shifting, for now the stronger influence on the housing market is the ongoing imbalance between demand and supply,” said Simon Rubinsohn, chief economist at RICS. “The inventory on agents' books appears to have slipped back towards historic lows. Most activity indicators currently remain solid.”
The report also showed:
- New buyer inquiries and the outlook for rents rose most sharply in London and the South East, which were hardest hit during the pandemic.
- Expectations for prices in the next three months rose most sharply in the South East and eased slightly in London
- Tenant demand for rental property remained firm, with a balance of 45% of agents reporting an increase, while instructions to let out new properties fell
- A third of respondents saw an increase in demand for energy-efficient homes in the past year, but say the trend has very little impact on selling prices.
“The market is tone-deaf to the BOE comments of late,” Joshua Homans of ECM Valuations in Stratford, east London, said in the RICS report. “I would be very surprised to see house price falls during strong general price inflation.”
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