House price rises outstripping central London

The North West saw the fastest rise in house prices last month, rather than any other part of the UK including central London, according to the December 2016 RICS (Royal Institution of Chartered Surveyors) UK Residential Market Survey.

More than half of the North West’s chartered surveyors (55%) saw a rise, rather than fall, in prices during December, while respondents in all other parts of the UK, except central London, also saw prices rise last month, but the North West by far reported the strongest price growth.

Over the next 12 months 15% more respondents in the region suggest that prices will increase further – albeit modestly.  All parts of the UK are expected to see higher prices over the year, although expectations remain relatively subdued in Central London.
 
Increasing house prices in the region could be deterring many would-be buyers as house sales in the North West faltered in December with only 4% more chartered surveyors in the North West reporting a rise in sales last month.

While it remains to be seen if this is a temporary setback, predicted sales over the next three months across the North West also saw a noticeable slow down with 33% more respondents not anticipating an increase in sales during the coming three months, down from 4% back in November.

However, some parts of the UK reported a rise in sales over December, with Wales, the South West, and the North East all seeing an increase.

Supporting the predicted slow start to 2017, new instructions to sell also failed to see any pick-up, with only 20% of agents in the North West reporting a rise in homes coming on to the market for sale.

Respondents to the survey also continue to highlight low stock levels as a key concern and a lack of choice for would-be buyers is weighing heavily on the housing market in the North West.

In the North West’s lettings market, tenant demand (non-seasonally adjusted) increased marginally, with 41% of agents seeing a rise in enquiries for rental properties, while new landlord instructions were more or less flat.

The growing demand, which is consistently out pacing supply, is causing rents to increase and 51% of respondents in the North West expect rents to rise further over the coming three months.

This trend is expected to continue with respondents projecting rental growth to average close to 5%, per annum, over the next five years.

Derek Coates of Venmores in Liverpool said: “December proved to be a quiet month in the run up to Christmas which was to be expected. The problem going forward is the lack of new properties coming on to the market, which is hindering sales and causing prices to continue rising.”

Simon Rubinsohn, RICS chief economist, added: “A familiar story relating to supply continues to drive both the sales and lettings markets impacting on activity, prices and rents.

“The eagerly awaited housing white paper should help to create a more positive framework for new build delivery but with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants.

“Meanwhile, the latest RICS survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill.”

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