House price growth driven by property shortage

22 January 2004
House prices continued to grow in the three months to December, driven by a shortage of properties, according to the latest survey.

The Royal Institute of Chartered Surveyors (RICS) found that house price growth in the three months to December reached its strongest pace for 13 months. The survey of chartered surveyors found that 41 per cent more reported price increases, compared to 33 per cent in November.

All regions of the UK reported growth, which was mainly due to the poor availability of properties on the market. RICS argued that the quarter per cent rise in interest rates from the Bank of England in November has had little effect on the market.

The survey found that the shortage of properties and fears about further rate rises in 2004 led to a larger than expected fall in the number of buyer enquiries.

Low numbers of properties coming onto the market and the continued strong demand for properties is expected to help maintain prices and drive the property market in the early part of 2004.

Strong house price growth was seen across all parts of the UK, with the exception of a very modest slowdown in the West Midlands. The largest rises were seen in the North, North West and Yorkshire and Humberside. London's market saw firm price gains in the three-month period, but price rises were more limited in the South East and East Midlands.

Surveyors are expecting the strong growth to continue in the first three months of 2004, with the largest gains expected in the North West. However, surveyors are much more cautious about the outlook for South East property prices, with little change being expected over the New Year.

Completed property sales in the three months to December recovered further from their summer dip and are now up 10 per cent from September. For the period, the average number of property sales per surveyor was 32 on a seasonally adjusted basis, which represents a 12-month high.

According to the survey, sales are only three per cent below the same period last year as the market has undergone a strong recovery from the uncertainty related to the War in Iraq.