Prices gain further momentum as supply tightens
once more and demand picks up speed

• Buyer demand increases at fastest pace since April 2014
• New instructions continue to fall with average stocks per surveyor hitting a fresh low
• Near term price expectations tick up, led by London

The May 2015 RICS Residential Market Survey results point to a further (albeit modest) acceleration in house price inflation over the month. What’s more, the rate of price growth has now quickened in each of the last four reports after slowing markedly during the second half of 2014. Tight supply conditions continue to be a key factor underpinning prices with fresh instructions to sell becoming increasingly sparse while average stocks per surveyor fell to a new record low (52 properties).

Indeed, hopes of an immediate post-election bounce in new vendor instructions appear misplaced, as fresh listings declined (on a seasonally adjusted basis) for a fourth consecutive month and have now failed to see any meaningful growth since the end of 2013. The sharpest contraction was once again seen in London and the North West. By way of contrast, the only reported rise in new instructions came in Scotland. New buyer enquiries increased in May after several months in which demand had remained broadly flat. Significantly, ten out of the twelve areas covered in the survey registered a pick-up in enquiries, while buyer interest was more or less unchanged in Wales and the South East.

The gentle improvement in demand has yet to be reflected in the agreed sales data which shows transactions edged up very slightly, effectively reversing the modest falls recorded in the preceding two months. Nevertheless, several parts of the UK are now seeing solid activity growth, most notably the South West, Northern Ireland and Yorkshire and Humber. At the other end of the scale, sales are still dwindling in London and the North West (a lack of suitable stock may form part of the explanation). Looking ahead, three month sales expectations strengthened both at the headline level and across most parts of the country (including the two aforementioned regions), while respondents still anticipate significantly firmer increases at the twelve month horizon.

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 per surveyor have decreased by around 12% since the turn of the year. When viewing price momentum at the country/regional level, the North West, Northern Ireland, East Anglia
and the South West posted the fastest rates of increase over the past three months, measured in net balance terms.

Interestingly, the May results show a substantial uptick in near term price expectations. Indeed, the net balance of surveyors expecting prices to rise (rather than fall) over the next three months increased. This upward shift in sentiment was led by London. In fact, the North West is now the only region exhibiting stronger near term price expectations than the capital. Over the next twelve months, respondents remain confident that prices will rise across all parts of the UK.

Meanwhile, credit conditions appear to have eased further with the composite measure of ‘perceived’ LTV ratios edging up slightly (now standing a shade over 79%), a trend that has persisted in each of the past three months.


Following the Election, a strong level of sales and relative dearth of new instructions is leading to a shortage of properties which will probably result in a hike in prices.

Please do not hesitate to contact me should you wish to discuss any matter regarding the marketing of your property.

Oliver Miles FRICS FCABE RICS Registered Valuer

01929 426655