There is “little evidence” that the pace of house price growth is losing much momentum, despite surging living costs, according to British property professionals.
A limited supply of available properties and steady growth in demand from buyers remain the overriding drivers of house prices, the Royal Institution of Chartered Surveyors said.
House prices have recently soared to record highs, despite the tough economic conditions caused by the coronavirus pandemic as well as the cost-of-living crisis, with inflation expected to hit 10 per cent later this year.
The institution's survey of property professionals in April found a net balance of 10 per cent reported a rise in new buyers’ inquiries rather than a fall. It marked the eighth month in a row in which the survey returned a positive net balance.
But looking at the supply of available homes, slightly more professionals reported a fall in new property listings compared with those who reported increases in new listings in April. Overall, this indicated a flat trend in new homes coming on the market.
The number of agreed sales was also broadly flat in April, having increased for the previous two months. Sales are expected to remain flat when looking to the year ahead.
Due to the imbalance between demand and supply, stock levels remain extremely low, averaging 38 properties per agency, the institute said.
The number of appraisals being undertaken is also little changed compared with 12 months earlier, which does not bode well for the flow of supply, the report said.
More than 80 per cent of professionals reported an increase in house prices in April, up from 74 per cent in March.
Surveyors expect prices to continue to rise. Looking forward to the next year, 62 per cent anticipate price increases, although this is down from 78 per cent in the February survey.
The number of available properties to rent is also edging down, as demand from renters increases.
The long-standing imbalance between supply and demand means that rents are once again expected to rise. Significantly, 63 per cent expect rents to rise in the next three months – the highest proportion since records started in 1999.
Rics economist Tarrant Parsons said: “Despite ... cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer inquiries.
“For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices.
“As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming 12 months have only moderated slightly from recent highs.”