Property price growth in the UK accelerated for the fourth consecutive month in May, as the shortage of homes for sale hit the worst level in around four decades, a study revealed.
The Royal Institution of Chartered Surveyors (RICS) said that its price gauge rose to 34 from 32 in April. Economists at Bloomberg had expected a reading of 36. In London, the measure leapt
to the highest in almost a year.
Price rises were fuelled by the continuing pressure on supply that many estate agents expected to see improved after the Conservative general election win.
Chief Economist at RICS, Simon Rubinsohn, says: “There had been some hope that the removal of political uncertainty would encourage more properties onto the market, but the initial indications are that this is not proving to be the case.
“It is hardly surprising that prices across much of the country are continuing to be squeezed higher, with property set to become ever more unaffordable.”1
Property sales were down 14% in May from the previous year, LSL Property Services and Acadata discovered in a separate report. The average house price in England and Wales rose 0.4% to a record £277,178, up 4.5% on the year earlier.
Estate agent Adrian Gill comments: “The general election did ruffle some feathers, but as we return to smoother ground, it’s becoming clear that there’s a more structural problem holding back the market and that the lack of properties on the market is starting to choke off activity. Price rises will only speed up if housing supply doesn’t put pedal to metal.”1
In May, the price index for London increased to 27% from 24% in April, RICS uncovered. The expectations measure for the next three months also grew to 49 from 12.
Aside from the South East of England, the strongest price growth is forecast for the North West, which is expected to benefit from George Osborne’s northern powerhouse plans to devolve powers to the region.