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Shortage of Houses on the Market Pushes Up Prices

The UK has seen an increase in interest from prospective homebuyers for the second month in a row, according to RICS, with 10% more surveyors reporting a rise in demand from buyers during October than a fall.

RICS has also found evidence of a continued rise in house prices, with 23% more respondents seeing price growth rather than a decline, up from a net balance of +18 in September.

The main exception to this continues to be inner London, which has apparently recorded its eighth consecutive monthly decline, with 16% more respondents in the capital reporting a fall rather than a rise in prices.

Lack of Houses for Sale Pushes Prices Up

RICS says that the rise in prices is mainly the result of a continued fall in the number of new properties on the market. Its survey found that new instructions over the month have fallen slightly again, suggesting that tight supply conditions continue to be a very dominant feature of the market across the UK.

“The dire shortage of available housing across the UK is continuing to push prices upwards, regardless of the uncertainty linked to the ongoing discussions surrounding Brexit,” commented Simon Rubinsohn, RICS Chief Economist. “We are only weeks away from the Autumn Statement and it will be interesting to see what measures – if any - the Chancellor will put in place to increase housing supply and create a more affordable market.”

Future Projections

In the wake of the EU referendum, there has apparently been a slight rise in the number of agreed sales in the UK, with 5% more chartered surveyors seeing activity rise rather than fall in October. Sales predictions for the coming months are positive, with a net balance of 25% of respondents forecasting a rise in transaction levels across the UK as a whole.

RICS also found that projections for price growth over the next three months have increased, with 18% more respondents foreseeing a rise over the next three months rather than a fall. Price expectations are now positive in all areas of the UK over the near term except central London, where respondents predict prices will remain broadly flat in the near future.

Mortgage Arrears Remain Low

This positive picture continues with the announcement from the Council of Mortgage Lenders (CML) that the overall mortgage arrears rate in the third quarter of the year remains unchanged and continues to represent the lowest arrears rate for over 20 years.

The overall repossession rate also remained the same in the third quarter as the second quarter, at 0.02%, representing 1,900 mortgages (of which 1,300 were owner-occupier, 600 buy-to-let).

“The latest arrears and repossession data still paints a reassuring picture of a market in which financial difficulties are relatively rare, and repossession rarer still,” said CML director general Paul Smee. “However, there is no denying that economic uncertainty for households is increasing. We would strongly urge all mortgage holders to consider whether there are ways that they can plan ahead for possible changes in the future - whether this relates to employment prospects, mortgage payments, or other spending.”

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