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House Price Growth Remains Firm but Supply Falls

House Price Growth Remains Firm but Supply Falls

The latest UK Residential Market Survey from RICS has revealed a slight dip in Scottish housing market activity in September, with a fall in new buyers and properties coming onto the market, however house price growth has remained firm.

According to the survey, 33% more respondents reported a rise rather than a fall in prices during September, and 14% more also predicted a growth in prices over the next three months.

Buyers and Sellers

RICS highlights that the lack of choice for would-be purchasers appears to be restricting overall sales activity, with September seeing a slight fall in the number of newly agreed sales. Looking forward however, respondents said they were optimistic about the sales outlook in Scotland, with growth expected over the next three months.

Interest from new buyers in Scotland also fell over the month, with 16% more respondents reporting a decrease in enquiries than an increase. On a national level the latest results show considerable variation in demand across the UK, with some respondents seeing a recovery while others report a more stable trend.

UK Position

Looking at the UK as a whole, RICS reports a continued fall in the number of new instructions being received by agents, and as a result, the average number of properties listed for sale with estate agents remains close to historic lows at just over 45 properties.

The fall in UK housing supply alongside the increase in buyer demand is expected to push up prices somewhat in the near term and by rather more in longer term, says RICS. The net balance shows prices crept up in September, with 17% more chartered surveyors reporting an increase in prices than a fall (up from +13% in August).

Over the next three months, house prices are predicted to rise further across the UK, with 14% more respondents expecting to see an increase. This is apparently the strongest reading since March and compares with +9% in August.

Caution over Central London Market

However, there remains a greater level of caution in central London where prices are expected to fall slightly over the same period. The message from surveyors appears to be that uncertainty following the EU vote, along with Stamp Duty changes, are both continuing to adversely impact the top end of the market in particular.

“The market does now appear to be settling down following the significant headwinds encountered through the spring and summer,” commented Simon Rubinsohn, RICS Chief Economist. “Buyers do appear to be returning, albeit relatively slowly, but the big issue that continues to be highlighted by respondents is the lack of fresh stock on the market. Although this is not a new story, it is a significant one having ramifications for both prices and the level of turnover.”

“Central London remains something of an outlier with contributors telling us this is the one part of the market where there may be further give on prices in the near term” he added. “Elsewhere the price trend still seems on the up.”

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