While there was a small increase in housing demand in November, the low supply of new homes means the market faces a slow start in 2017.
According to the the Royal Institute of Chartered Surveyors, the number of prospective buyers in the UK housing market has increased for the third consecutive month in November, but a slow start to 2017 is expected due to a lack of stock. It is now the ninth consecutive month supply has failed to rise.
While demand has risen, the figure remains historically low with 13% more surveyors reporting a rise in new buyer enquiries rather than a fall.
Prices are expected to rise, with 14% of surveyors anticipating an increase in the next three months.
However, economic uncertainty surrounding the EU referendum and stamp duty changes will continue to have an impact on the market.
In the next year, 40% of surveyors expect house prices to rise, except in London where tax changes are still weighing heavily on the market.
Larger properties in the capital are expected to show the slowest growth, with surveyors citing stamp duty changes over the past two years as the main cause.
Simon Rubinsohn, RICS chief economist, said: “A key issue for the housing market is the slowdown in transaction activity since the spring, which is clearly being reflected in the RICS Agreed Sales data as well as in official figures.
“Although there are some signs that the numbers may begin to edge upwards in the New Year, the combination of macro-uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest. This is significant, not just for the housing market itself, but also for the wider economy given how much of consumer spending is tied in with home purchases.”
Stephen Smith, director of Legal & General Housing Partnerships, said: “In spite of all the political upheavals that this year has experienced, the fundamentals of the UK economy and demand for housing continue to go from strength to strength. Although surveyors are expecting a slow start to 2017 due to a lack of housing supply, this is not a surprise and it will take time for the recent housing announcements from the Autumn Statement to kick in.
“With the Government’s pledge to inject £1.4 billion into the housing market to help tackle our nation’s housing shortage, the future looks brighter for aspirational home owners. These legislative changes, coupled with the promise of a Housing White Paper at the start of the New Year, will hopefully shape the future of the housing market for the better, and tackle this shortage of homes head on.”
