Price and rent pressures 'continuing to spread' in housing market

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Housing market activity stuttered in December, but prices continued heading firmly upwards, according to surveyors.

The Royal Institution of Chartered Surveyors (Rics) also found evidence that, "for good or ill", upward pressures on house and rental prices are spreading from higher value areas to more modestly valued parts of the market away from London.

Overall, Rics said a net balance of 1% of surveyors reported a fall rather than a rise in newly-agreed sales last month, following a stretch of sales increasing since August.

The findings "point to sales activity stuttering somewhat having appeared to be gaining momentum over recent months", the report said.

Despite this, some parts of the UK did see sales pick up in December - Wales, the South West, and the North East of England.

Looking ahead, a balance of 32% of surveyors across the country expect sales to rise rather than fall over the coming year, with Scotland and Northern Ireland reporting the strongest expectations.

House prices continued to grow in December, despite sales generally falling back, with 24% more surveyors seeing an increase rather than a decrease in prices. 

The findings "suggest house prices are rising firmly at the national level", the report said.

Those taking part in the survey said a lack of choice for would-be buyers remains an issue. The number of new homes coming on the market failed to improve for the 10th month in a row.

Central London was the only area where prices fell in December, the report found.

House prices there have been heading downwards for 10 months.

Meanwhile, surveyors in the North West of England reported the strongest price growth, with 55% more surveyors there seeing prices increase rather than decrease.

Across the country, a net balance of 49% of surveyors expect prices to increase rather than decrease over the coming year.

All parts of the UK expect to see higher house prices over the year ahead, although expectations remain relatively subdued in central London, the report said.

Looking at the rental market, Rics found rents are being squeezed higher due to demand from tenants out-pacing the supply of homes. Surveyors expect rents to increase by around 5% per year on average over the next five years.

But in contrast to the rest of the country, the feedback from the London rental market suggests demand has fallen for the fourth month in a row, and rental prices there are now expected to come under some downward pressure in the next few months.  

Simon Rubinsohn, Rics chief economist, said: "The latest Rics survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market, for good or ill."