Post-election rise in home sales and new buyers prompts shortage warning

Home buyers and sellers have returned to the market after general election, surveyors’ organisation RICS says

House prices look to set to rise over the coming year as home buyers and sellers both returned to the market following the election (PA)

Estate agents urged the government to tackle the shortage of housing on Thursday as their latest survey showed an increase in the number of property sales and enquiries from potential buyers last month.

House prices looked set to rise over the coming year as home buyers and sellers returned to the market following the general election, surveyors’ organisation RICS said.

The number of property sales edged up in December, posting its first increase in seven months, RICS said. New enquires from potential buyers increased, while the number of sellers putting their homes on the market also rose.

“The signals from the latest survey provide further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome,” said Simon Rubinsohn, the chief economist at RICS.

But he warned that because affordability remained a key issue in many parts of the country, the shift in “mood music” on prices was a concern, particularly with signs of a revival of optimism in London after a period of falling prices.

“This highlights the critical importance of the government addressing the challenge around housing supply, particularly with the gradual phasing out of the Help to Buy incentive,” he added.

The RICS survey, based on the opinions of surveyors up and down the country, found that 17 per cent more respondents saw a rise rather than a fall in enquiries from new buyers last month, up from minus 5 per cent in the previous month.

Most regions saw interest from new buyers increase, with respondents in Wales and the north east reporting solid growth while enquiries rose in London and the south east after negative results in November.

The number of transactions also increased, with 9 per cent more respondents seeing a rise than a fall. While a net balance of 9 per cent also reported an increase in new instructions offering some relief from the price pressure, this was concentrated in London and the south, while the rest of the country was flat.

A net balance of 61 per cent said they expected prices to increase over the coming 12 months, almost double the 33 per cent balance a month earlier.

The upbeat tone will add to the dilemma the Bank of England faces when it decides on interest rates at the end of the month.

Earlier this week, Halifax said house prices rose sharply in December, increasing by 1.7 per cent from the previous month to push the annual increase to 4 per cent. Official figures released on Wednesday showed that prices rose by 2.2 per cent in the year to November, up from 1.3 per cent in October.

However, this has been offset by a slew of downbeat data, including a drop in the annual inflation rate to 1.3 per cent from 1.5 per cent last month, taking it further below the bank’s 2 per cent target. The economy contracted by 0.3 per cent in November to leave annual growth at zero.