House prices increased faster in July as demand from buyers rose, but the amount of homes on the market dropped to a record low, revealed a report from the Royal Institution of Chartered Surveyors (RICS).
The number of properties for sale has now declined for the sixth consecutive month, while the amount of new buyer inquiries has been rising for four months.
The average number of homes for sale through each RICS member decreased to 47 and new listings were down in nine out of 12 UK regions. Surveyors in East Anglia experienced the sharpest fall.
RICS says that its members agree that the shortage of homes on the market is causing a “vicious cycle, as the limited choice on offer is deterring would-be movers and therefore further restricting new instructions.”
The difference in supply and demand has caused surveyors to predict huge house prices rises over the next year, with the highest gains expected in East Anglia and Northern Ireland.
Rents are also forecast to increase, as demand is again surpassing supply.
Chief Economist at RICS, Simon Rubinsohn, says that with prices rising but sales remaining flat, the housing market has serious problems.
He adds: “More worrying still is the suspicion that the imbalance between supply and demand will lead to even stronger price gains over the next 12 months. This is also visible in the firmer pattern in the buyer inquiries series, which has now risen for four months in succession, reflecting in part a further modest easing in credit conditions.”1
1 http://www.theguardian.com/money/2015/aug/13/house-prices-rents-rise-rics-surveyors