Lack of supply continuing to push up house prices in the West Midlands
A LACK of supply is continuing to drive up house prices across the West Midlands, according to the Royal Institution of Chartered Surveyors.
In its latest Residential Housing Market Survey, RICS said that for the eleventh consecutive month chartered surveyors had reported a decline in new homes coming onto the market in the region.
The lack of stock is ultimately driving up prices with 58% more respondents reporting price rises over the past three months across the West Midlands. Further price increases are expected for the coming three months, albeit the pace of growth is anticipated to ease slightly.
For the second consecutive month the West Midlands reported the strongest price growth across the UK, alongside the North West. London, Wales and the North East were the only regions to report a fall in prices.
The number of prospective buyers in the region’s housing market increased for the third month in a row in November, but the pace of increase remains only modest with 14% more surveyors reporting a rise in new buyer enquiries instead of a fall.
The rise in demand during November led to a further rise in agreed sales across the West Midlands – 28% more respondents across the region reported growth in activity over the month but while this is the highest reading since February, caution remains, according to anecdotal feedback.
Supply shortages and the growth in sales activity, albeit only modest, alongside a lack of new instructions, have led to a further decline in homes for sale. Anecdotal comments suggest that many respondents expect the beginning of 2017 to be quiet, reflecting the lack of fresh properties coming to market.
Colin Townsend, of John Goodwin, said: “There is still a sustained demand for an ever shrinking supply of homes coming onto the market. Stocks are as low as they have been for many years and whilst 2016 has been an extremely productive year the shortage of supply going into 2017 suggests that prices will rise again.”
Giving the national picture, Simon Rubinsohn, RICS chief economist, said: “A key issue for the housing market is the slowdown in transaction activity since the spring which is clearly being reflected in the RICS agreed sales data as well as in the official figures.
“Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro uncertainty, the on-going 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.
“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.”
In the lettings market, tenant demand continues to outstrip supply. Despite Christmas approaching 11% more chartered surveyors reported a rise in tenant demand. New instructions continue to fall with anecdotal evidence suggesting agents are waiting on clarification from the Chancellor’s latest Autumn Statement.
