Dwindling supply of homes is pushing up house prices, say surveyors

House price growth accelerated across the UK in April amid a slowdown in the supply of homes, according to surveyors.

A net balance of 44% of property professionals saw buyer inquiries pick up last month, the Royal Institution of Chartered Surveyors (Rics) said.

For the first time this year, positive growth was reported in new buyer demand across every region.

And a balance of 75% of surveyors noted house prices increasing rather than decreasing.

But a lack of fresh property listings was the biggest concern cited in the latest survey – with many saying it was not nearly enough to match the interest shown by potential buyers.

Professionals reported that new instructions from home owners looking to sell up eased significantly, with an overall net balance of 4% reporting a decline.

The survey findings suggested a growing number of professionals expect house prices to increase over the next three months.

Looking to 12 months’ time, a balance of 68% of surveyors anticipate house prices will have increased rather than decreased.

In the rental sector, tenant demand for rental properties picked up over the quarter to April, with a net balance of 60% of professionals observing an increase. The loosening Covid-19 restrictions and positive vaccination numbers were said to be behind the growth in demand.

However, this was met by a falling supply of vacant rental properties, adding to the upward pressure on rental prices.

Simon Rubinsohn, Rics chief economist, said: “Housing supply, or more pertinently, the shortfall in supply relative to demand, is the key theme coming through loud and clear from respondents to the latest Rics survey.

“While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low interest rate environment, an uplift in delivery does have a role to play.

“Planning reforms as outlined in the Queen’s Speech (on Tuesday) are likely to provide part of the answer although it is critical, particularly with regard to permitted development rights, that quality and safety are not compromised.

“Ensuring a broad range of tenures in the delivery pipeline is also important with anecdotal evidence from the survey emphasising a severe lack of stock in the private rental market as likely to drive up rents sharply over the next year.”