In its latest UK Residential Market Survey, the Royal Institution of Chartered Surveyors (RICS) attributes the sharp rise in UK house prices to a combination of steady demand coupled with inadequate supply.
Indeed, the survey found that much of the UK had seen demand remain steady and consistent, but there has been an ‘insufficient’ number of fresh listings.
The authors of the survey report said: “The survey’s headline measure of house price growth rose again over the month, with a net balance of +75% of respondents noting an increase in prices during April. This is up from a reading of +62% back in March and has now become successively more elevated in each of the last three reports. Furthermore, all UK regions/countries are now seeing a sharp pick-up in house price inflation.”
The report also attracted comments from others in the industry, including Tahir Farooqui, CEO of Canopy, who added: “There’s a risk that the property market is being artificially propped up by measures like the stamp duty holiday. While higher-earners and second steppers have got to swoop in on the buying frenzy and make the most of cut costs, sky-high house prices are making homeownership even further out of reach for hopeful first-time buyers. When the dust settles and the support schemes are taken away, securing an affordable mortgage will remain a pipedream for many.”
Farooqui advocates providing more support to those looking to move out of rented property and onto the property ladder, and he suggests that prospective first-time buyers who currently rent should see their rent payments factored into their credit rating to help boost their chances.
Others attribute the current bullish market to the extension of the stamp duty holiday. Rich Horner, head of individual protection at MetLife, said: “The fear of missing out has placed immense power in the hands of sellers, with many listings being sold at inflated prices that would have been inconceivable a year ago. But the market knows that this level of activity and house price growth is not sustainable, it’s a question of when prices stabilise rather than if.”
Meanwhile, Ross Counsell, chartered surveyor and director at GoodMove holds a more pessimistic view. He said: “What does this mean for the rest of 2021? Over the coming months, we expect that as we draw closer to the stamp duty holiday deadline, demand will remain strong and there will be a rush of buyers hoping to complete a house sale before the deadline. This will ultimately cause an even bigger imbalance between supply and demand and as a result house prices will inflate even further.”
Counsell added: “Looking further into the year, post-stamp duty holiday, we stand by our predictions that house prices will begin to fall although the more long-term impacts of the pandemic on the economy and how this will impact the housing market remain rather uncertain.”