House price growth increased again in June, suggesting renewed acceleration in property inflation during the second half of the year, according to the latest residential market survey from the Royal Institute of Chartered Surveyors.
While the average stock of homes per surveyor fell to a record low - the data series began in 1978 - demand edged upwards for the second successive month, despite lenders’ more cautious attitude.
Rics stated the slight recovery in buyer enquiries is likely to have been due to a further drop in mortgage rates which is accompanying the ongoing strength of the labour market.
The research revealed that 41 per cent more surveyors expect house prices to increase over the next three months - the highest proportion since April 2014 - with 36 per cent more surveyors expecting sales to increase, despite the broadly flat trend in newly agreed sales.
Across the rental sector, surveyors reported a demand and supply imbalance is also apparent and instructions, which have been broadly unchanged for the past couple of years and show no signs of a material increase.
Surveyors said this was at odds with the rising demand that is putting further upward pressure on rents.
Simon Rubinsohn, chief economist at the society, said that there had been some hope that the removal of political uncertainty following the general election would encourage more properties onto the market, but initial indications are that this is not proving to be the case.
“Additionally, the recent flat pattern of appraisals by respondents to the survey suggests this is not about to change anytime soon As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable.”
Jeremy Blackburn, head of policy at Rics, said the housing benefit cuts announced in the Budget will push many out of the private rented sector and towards social housing, at a time when councils and housing associations are already constrained.
“This is then combined with the extension of the Right to Buy, which will take further units out of supply.”
peter.walker@ft.com
