New record low for supply of homes for sale

The supply of homes for sale has fallen to a new record low, squeezing house prices higher, the Royal Institution of Chartered Surveyors (RICS) has reported.

The shortage of properties on the market worsened in July to its lowest levels since records started in 1978, with about 47 properties for sale per surveyor.

Surveyors said that a lack of homes for sale is causing a "vicious cycle", whereby the limited choice on offer is in turn putting would-be movers off putting their home on the market.

Average stock levels have fallen by a fifth since January and the widespread decline has recently been particularly sharp in East Anglia, according to RICS.

It said all areas of the UK are projected to see sizeable house price gains over the next 12 months, with confidence most elevated in East Anglia and Northern Ireland.

Demand from buyers is rising at the fastest pace seen since February 2014, RICS said.

Despite growing demand from house hunters, the number of new sales agreed has remained unchanged, suggesting the supply shortage is preventing transaction levels from increasing significantly, it said.

House sales in the South East of England and Yorkshire have fallen and been broadly flat in London, according to the findings.

But some areas, such as Wales, Northern Ireland, the West Midlands and the South West of England, have seen sales increase in recent months.

With the stock of available properties continuing to be squeezed, house price inflation picked up to the strongest pace seen in a year.

Northern Ireland, the North West of England and East Anglia were seeing the strongest upward price momentum.

The North East of England was the sole exception to the price gains, with values there reported to have fallen for the third month in a row.

RICS said that a "strong majority" of 68% of surveyors perceive current market valuations in their areas to be either around or below their fair value at present.

But 60% of contributors based in London were of the opinion that their local market is currently overpriced to some extent.

Simon Rubinsohn, RICS chief economist, said the imbalance between supply and demand could lead to further strong price gains over the next 12 months.

Mr Rubinsohn said: "A renewed acceleration in house price inflation allied to a fairly flat trend in sales activity highlights the very real challenges being presented by the housing market."

Housing minister Brandon Lewis said: "Our efforts have got the country building again - new housing starts are at a seven-year high and almost 800,000 additional homes have been delivered since the end of 2009.

"We have turned around a broken housing market, and our affordable housebuilding efforts are exceeding our ambitions and have delivered more than 260,000 affordable homes in the last five years. This is real progress but we know there is more to do. That's why we are committed to deliver 275,000 extra affordable homes over this parliament - the fastest rate of build for 20 years."