UK house prices soared in June 2015 fuelled by a scarcity of homes on the market, new research has suggested.
The latest Royal Institution of Chartered Surveyors UK Residential Market Survey said that although the average stock of homes per surveyor fell to a record low, "demand edged upwards for the second successive month, despite the more cautious attitude of lenders".
A further drop in mortgage rates accompanied by the ongoing strength of the labour market has helped to spark the fastest rise in nine months. The West Midlands and London saw the strongest increase in potential buyers during the month.
Significantly, RICS said that 41% "more surveyors expect house prices to rise over the next three months, which is the highest proportion since April 2014 and 36% more surveyors expect sales to increase despite the broadly flat trend in newly agreed sales.
"Across the rental sector, the demand and supply imbalance is also visible and landlord instructions, which have been broadly unchanged for the past couple of years and show no signs of a material increase, are at growing odds with the rising demand that is putting further upward pressure on rents."
It added: "Although much of the discussion about supply shortages has focused on the owner-occupier market, the latest RICS Residential Market Survey demonstrates in no uncertain terms that the issue, at least at a headline level, is just as visible in the rental sector. This is most clearly reflected in both the house price and rental projections over the medium term which comfortably exceeds the likely growth in wages."
Political stability has not helped the market as predicted
Simon Rubinsohn, chief economist at RICS, said that hopes the removal of political uncertainty after the general election would push more properties on to the market were not being realised.
"As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable," he said.
RICS head of policy UK Jeremy Blackburn added: "The Conservative Government has its sights set on a long-term project to drive owner occupation and property owning. This is of course at the centre of our society and economy. Our market survey shows, however, that it is not just in this area where there is a marked shortfall in supply. Just as significant is the pressure that is clearly building across the rental sector.
"Currently 36%, approximately 8.3m households, are in rented accommodation. Rental is particularly important for enabling the younger more mobile workforce that it is central to improving our economic productivity."
He warned that housing benefit cuts announced in George Osborne's Summer Budget on 8 July "will push many out of the Private Rented Sector (PRS) and towards social housing, at a time when councils and housing associations are already constrained. This is then combined with the extension of the Right to Buy, which will take further units out of supply.
"In the last government the Prime Minister said if he could find one button in No10 to increase housing supply he would have pushed it. There has never been just one button, it is far more a complicated dashboard. This is why we need a coherent and coordinated strategy to increase supply across all tenures."