The Royal Institution of Chartered Surveyors (RICS) reports house prices rose for the 11th consecutive month at the fastest pace in four years, according to its latest housing market survey. 45.1% more Chartered Surveyors reported a rise than a fall in September, up from 34.9% in August, and more than double the long run average of 21%. RICS estate agents reported that price rises are being driven by a combination of would-be buyers returning to the market and the limited availability of property.
Price increases were again led by London and the South East, boosted by the a booming City economy, with rising investor confidence pushing the stock market to its highest level since May. Estate agents report that 'gazumping' is taking place amid prices in the capital rising at the fastest pace since January 2000. Elsewhere, a ripple effect is taking place across the country with house prices in the North West and East Anglia picking up sharply, while Wales, Yorkshire and Humberside also recorded price rises.
Buyer enquiries rose for the sixteenth consecutive month, the longest run on record. Above trend economic growth combined with a strengthening employment market continued to boost buyer confidence but the rise is the smallest since April 2006. New instructions to sell property fell for the fourth month in a row, at the fastest pace since June 2002, indicating that households feel under little pressure to put their property on the market. Optimism in price rises is at its highest since October 2004. However, surveyors expect a modest slowdown in sales activity as interest rates are expected to rise again.
RICS spokesman, Jeremy Leaf, said: "Greater economic activity has created a ripple effect in house prices across the country. With stocks of property low and buyer enquiries on the increase, sellers remain in poll position to benefit in the short term. Continuing house price rises will make it difficult for the Bank of England to leave the base interest rate level at 4.75 percent, unless the economy shows unexpected weakness. With affordability conditions for first-time buyers worsening, as price rises outstrip wages, higher interest rates will not help. However, a strong economy means that the housing market should see a soft landing in 2007."
