UK housing market faces quiet start to new year

The UK housing market faces a slow start to 2017 because of a lack of stock, according to the Royal Institution of Chartered Surveyors (RICS).

The professional body said on Thursday that supply in the residential market has continued to stagnate, with no increase for the ninth consecutive month.

Sales activity is rising, but supply shortages remain a “constraining feature” of the market, RICS said. Moreover, the modest growth in sales activity, alongside a lack of new instructions, has led to a further decline in homes for sale.

Many surveyors in the monthly survey expect the beginning of 2017 to be quiet, reflecting the lack of fresh properties coming to market.

“Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro-uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest,” commented Simon Rubinsohn, chief economist at the RICS. “This is significant, not just for the housing market itself, but also for the wider economy given how much of consumer spending is tied in with home purchases.”

The report also showed that, with stock continuing to dwindle, most of the UK is now seeing an increase in house prices.

Near-term expectations continue to point to rising prices over the coming three months, with 14% more surveyors anticipating an increase rather than a decline, RICS reported.

The Halifax, part of Lloyds Banking Group, reported on Wednesday that annual growth in UK house prices accelerated in November for the first time in eight months.

Figures from the Halifax show that prices rose by 6% compared with a year ago, taking the average price of a home to £218,002. However, the lender also said that the annual rate had been on a “steady downward trend” since March and may slow over the coming months.

Another mortgage lender, Nationwide, said last week that annual house price growth had slowed down in November. Its figures showed that prices were 4.4% higher than a year earlier and the average price of a home was now £204,947.