Lack of stock continues to drive price growth in SW

In November, 40% more chartered surveyors saw house prices rise rather than fall in the South West according to the latest RICS UK Residential Market Survey.  

The general mismatch between supply and demand continues to drive growth in prices and 45% more respondents expect prices to rise further over the next three months (as opposed to a fall)  –  this is higher than the national balance of 33% projecting a further increase in prices.

New buyer enquires picked up over the month, with 9% more respondents seeing an increase (rather than a fall) in demand during November. Meanwhile, the November results show 10% more respondents reported a decrease in new stock coming onto the market.

This consistent lack of new supply has pushed the average number of properties on surveyors’ books down to 43, from 46 last month, the lowest reported level in nearly fifteen years.

Although the shortage of supply appears to be holding back sales at present, respondents in the South West are positive on the outlook for the coming months with 41% more chartered surveyors expecting to see a rise rather than a fall in activity – this is up from 35% in October.

This probably reflects a boost to sentiment following the announcement of a range of new housing policies in this year’s Autumn Statement.  Indeed, the new Help to Buy and Starter Homes initiatives, aimed at increasing access to home ownership, are likely to add to activity levels in the coming quarters. However, price levels are expected to continue to rise perhaps signaling the view from respondents that, although new house building is expected to increase, the belief is that this will not be enough to take the market back to more sustainable levels.

RICS member, Anthony Corben Student, Corbens, Isle of Purbeck, commented, “We are now experiencing a lack of properties being marketed and very little development in the area. With demand high this is going to push prices up for the foreseeable future.”

Simon Rubinsohn, RICS Chief Economist, said, “I can’t recall a set of comments in the residential survey which have so frequently drawn attention to lack of stock on the market. Given this, it is hard not to envisage prices continuing to climb upwards as we move through the early stages of 2016.

"It remains to be seen how successful the government’s latest set of initiatives will be in driving up the rate of new build but with the best will in the world, it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline.

“A material rise in the cost of borrowing has the potential to take some of the momentum out of the market but there is at this stage little indication that the Bank of England is minded to take a steer from the US Federal Reserve. Moreover, all the signals from the Bank still point to a very gradual upward trajectory for base rates when it eventually decides to move policy in this direction.”