Housing activity in Britain up, but prices rise at slower pace

LONDON • British house prices rose more slowly last month as the number of deals grew, though the market remained hampered by a shortage of properties for sale, a body representing property valuers said yesterday.

The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance fell to +44 in September after touching its highest level in more than a year at +53 in August.

The September reading was at the bottom end of the range of forecasts from economists polled by Reuters who, on average, expected a further increase to +55.

Activity in the market picked up last month despite the smaller share of surveyors reporting higher prices. The number of sales agreed rose at the quickest pace since May 2014 - chiefly driven by increases in Scotland and northern and eastern England - and the number of new buyer inquiries rose for a sixth month.

The Royal Institution of Chartered Surveyors last month doubled its forecast for house price gains this year to 6 per cent. Mortgage lenders Halifax and Nationwide have said house prices rose by nearly 9 per cent and 4 per cent respectively in the 12 months to September.

However, the greater number of sales was not being matched by more properties coming onto the market, as the number of new instructions had fallen in 13 of the past 14 months, RICS said.

"Unless the stock being sold is replenished, there is a limit to how sustainable this modest improvement in market turnover will prove to be," RICS chief economist Simon Rubinsohn said.

British Prime Minister David Cameron on Wednesday said his government would change planning rules to encourage developers to build more affordable housing for buyers.

Mr Rubinsohn welcomed the plans but said the government needed to take a more holistic approach to easing the housing squeeze, which should include more measures to boost the rental sector.

He said prices were likely to continue to rise in the coming months and into early 2016.

RICS last month doubled its forecast for house price gains this year to 6 per cent. Mortgage lenders Halifax and Nationwide have said house prices rose by nearly 9 per cent and 4 per cent respectively in the 12 months to September.

The Bank of England (BoE) and other regulators tightened controls on mortgage lending last year to stave off a rise in the number of risky loans offered to home-buyers. BoE officials have not sounded as concerned about the housing market since then.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 09, 2015, with the headline 'Housing activity in Britain up, but prices rise at slower pace'. Print Edition | Subscribe