Residential Market Survey for July released by RICS

Call for coherent strategy to end the supply shortage.

The Royal Institute of Chartered Surveyors (RICS) has released its latest Residential Market Survey, which shows that increased demand is not being matched by supply.

It is part of the July 2015 RICS Residential Market Survey, a monthly sentiment survey of chartered surveyors who operate in the residential sales and lettings markets.

Results showed that 44% of respondents reported a rise in prices, 22% more surveyors reported a decrease in new instructions.

In the latest survey, there is evidence that momentum has gained pace because of a rise in buyer demand, but supply conditions continue to tighten.

Nationally, the unsold stock shortage got worse during July, as the RICS stock per surveyor measure slumped to a record low of 47.

A steady improvement in demand was accompanied by an unchanged level of sales nationally in July, which supports the notion that a supply shortage is preventing transactions from rising.

Despite this, Wales, Northern Ireland, West Midlands and the South West all saw a rise in sales in recent months.

Trends in July’s survey are similar to those of recent months, with prices squeezed higher by growing demand against a backdrop of contracting supply, which has, on average, decreased by 20% since the turn of the year.

It has resulted into an acceleration of national house price inflation to a level not seen since last July.

In the next three months, 41% of RICS members are expecting prices to increase, yet despite the rise in prices, enquiries have also gone up by 25%.

Jeremy Blackburn, Head of Policy at RICS, believes supply will only be addressed with a “coherent” strategy.

He said: “This government has put home ownership at the heart of its agenda, with Starter Homes and extending Right to Buy the strongest evidence of that ambition.

“However, this continues to be demand drive and fails to address the real issue of supply.

“A coherent and coordinated house building strategy is required across all tenures. This should include measures that will kick-start the supply-side, such as mapping brownfield, addressing planning applications and creating a housing observatory to assess the underlying economic and social drivers of housing and provide impetus for solutions.

“The changes brought in through Fixing the Foundations, the Chancellor’s productivity plan, were welcome and refreshingly on the supply side – such as zonal planning, dispute resolution for S106 and local plan enforcement.

“But these alone are not a strategy for increasing housing supply across all tenures.”

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