House price growth driven to four-year high

The latest figures released by the Royal Institution of Chartered Surveyors has revealed that August saw further heightened activity in the housing market with enquiries, sales and new instructions all continuing to perform strongly.

63% of respondents to the August RICS UK Residential Survey revealed that they saw a rise in buyer interest over the month, however, the longer-term view remains more cautious.

As buyer enquiries continued to rise, new instructions also saw a jump, with a headline net balance of +46% of survey participants noted an increase in vendors listing property to sell.

As a result, strong growth in agreed sales was cited for the third month on the bounce, with 61% of contributors seeing a pick-up. Looking ahead, near term sales expectations remain modestly positive, but twelve-month sales projections are still in negative territory. Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

The survey feedback also revealed a sharp acceleration in house price inflation. At the national level, a net balance of +44% of respondents reported an increase in prices, the strongest reading since 2016. This is up from a net balance of +13% in July and marks a dramatic turnaround compared to the reading of -33% registered back in May. What’s more, virtually all parts of the UK are now seeing prices increase. The only exception is London, where prices are cited to have remained more or less flat over the past two months.

Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents anticipate demand increasing for homes with gardens over the next two years. 79% predict rising demand for those properties near green space, while 68% foresee a rise in the desirability of properties with private outside space.

Simon Rubinsohn, RICS chief economist said, “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.

“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.”