A professional body has blamed “an acute shortage of supply” for an acceleration in house price inflation for May, as other figures suggested increased buy-to-let activity was partly to blame.
The 25-page May residential market survey, published by the Royal Institution of Chartered Surveyors, warned there had been a modest acceleration in house price inflation in May because of tight supply conditions - with the average house stock for each surveyor falling to a record low of 52 properties.
The report said: “Despite the relatively stable sales trend, modest demand growth and an acute shortage of supply are combining to push house price inflation higher.
“As such, price growth has now gained momentum in four successive months, while average stocks for each surveyor have decreased by around 12 per cent since the turn of the year.”
The findings came as other figures pointed to growing buy-to-let activity in the UK.
|Quarter, year||Value of buy-to-let loans advanced|
Source: Bank of England
Meanwhile, On 9 June, a two-page report by the Bank of England has revealed that the value of BTL lending had increased from £6.8bn advanced in the first quarter of 2014 to £7.6bn a year later.
The same release revealed that the value of residential loans advanced to first-time buyers had fallen from £9.4bn in the first quarter of 2014 to £8.9bn a year later.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “The figures from the Bank of England show that the market as a whole is down on last year; however, our own figures are up by over 10 per cent.
“The intermediary share of the market is growing due to the success of brokers who have adapted well to changing market conditions and new regulation.”
Figures released by the Council of Mortgage Lenders on 19 May showed that the value of BTL loans advanced in March 2015 was £2.7bn, up by 35 per cent against the year before.
Meanwhile, several firms have made moves into the BTL market in recent weeks. On 2 June, TSB Intermediary announced it was expanding its BTL range to include three-year fixed rate mortgages.
On the same day, specialist firm Mortgages for Business announced it had brokered two BTL mortgages for Axis Bank, which piloted a BTL offering in April.
James Carter, principal for London-based Independent James, said: “Buy-to-let undoubtedly does reduce supply but there are other factors such as immigration, lack of housebuilding and councils hoarding land.”