House prices rise but supply falls

House prices in the South West jumped sharply in May, despite the number of homes per UK surveyor falling to a record low since the data series began in January 1978, according to the latest RICS UK Residential Market Survey.

While 46% more surveyors saw prices rise in May (the same month in which the Nationwide Building Society estimated that the average price of a home in the UK has now climbed to £195,000), supply to the market declined for the fourth consecutive month with 22% more surveyors reporting a drop in new instructions.

Despite the sharp incline in new buyer enquiries (30% more surveyors reported an increase in enquiries, compared to 7% in April), 39% more surveyors in the South West expect prices to rise over the next three months.

Mark Annett FRICS of Mark Annett & Company, said: “It is still a patchy market despite the election passing. The issue now is instructions. Providing the price is right we can sell them.”
In the lettings market, tenant demand in the South West increased significantly in May (on a non-seasonally adjusted basis) and respondents’ anticipate rents will rise above the UK average (2.7%) at 3.6% over the next 12 months.

Simon Rubinsohn, RICS Chief Economist, said: “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. As a result, it is hardly surprising that prices are continuing to rise – with the reality meaning that properties are not becoming any more affordable any time soon.”