RICS have released their Residential Market Survey for August 2015.
- Prices rise at quickest pace in over 12 months
- New buyer enquiries continue to build at a solid rate
- Lack of new instructions still appear to be holding back sales growth
The August 2015 RICS Residential Market Survey results point to a further acceleration in national house price inflation, again underpinned by the enduring mismatch between falling new instructions to sell and rising buyer demand.
At the national level, new buyer enquiries increased for a fifth month in succession, with the robust pace of growth broadly consistent to that reported in the past four surveys.
Most parts of the UK continue to see rising demand, led by significant
improvements in the West Midlands, the North West and Wales. Alongside this, new vendor listings declined for the seventh consecutive month, albeit the pace of decline did
ease moderately. Nevertheless, new instructions have yet to record any meaningful uptick since the middle of 2013, pushing average stock levels to record lows.
Supply remains a challenge
With the supply situation remaining a challenge, agreed sales showed only the most modest of increases for the fourth consecutive month. However, regional movements
vary considerably from the national sales picture. Indeed, the West Midlands, the North and the South West all posted solid growth in transactions, while East Anglia and the North West were reported to have seen a drop in sales volumes. Looking ahead, all areas of the UK are expected to chalk up significant sales growth over the next twelve months, with the outlook particularly upbeat in Wales and Scotland.
Imbalance between supply and demand
Given the ongoing imbalance between supply and demand in the market, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace. As such,
house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014. We would expect this to become
increasingly visible in the actual house price data released by the ONS and the major lenders in the coming months, given the historical lead provided by the RICS Price Balance over these series.
What’s more, prices are now reportedly increasing across all twelve regions/countries covered by the survey (prices picked up for the first time in three months in the North East). In net balance terms, the strongest growth came in East Anglia, Northern Ireland and Yorkshire & Humberside, although the vast majority of areas are seeing firm price momentum.
The Lettings Market
Turning to the lettings market, tenant demand rose (on a non seasonally adjusted basis) at a smart pace for the eighth straight month, outstripping the modest pick up in new landlord instructions once more in the process. Accordingly, rents are expected to increase in the near term (to a greater or lesser degree) right across the UK. RICS members are forecasting rental growth of approximately 3% at the headline level, with the strongest regional growth expected to come in the West Midlands (roughly 4%). Over the next five years, rents are (on average) anticipated to rise by around 4.5% per annum on a UK wide basis.