Survey shows sustained house price recovery

The revival in the housing market was sustained in December with activity and confidence showing improvement, according to a report released on Wednesday night by the Royal Institution of Chartered Surveyors.

The tone of the Rics survey matches other recently published measures of house prices and confirms that the market has disproved expectations of a crash and is gaining positive momentum.

The FT house price index released on Friday registered an annual price rise of 2.7 per cent for December. On Monday, the Office of the Deputy Prime minister on Monday said that house prices in November had climbed 2.5 per cent over the previous 12 months, and Rightmove, the property website, proclaimed an annual increase for January of 3.6 per cent.

After recording 15 consecutive months of decline up to October, Rics said that more of its members reported rising house prices in the three months to December, with the positive balance of eight up on the four recorded in November. In August the survey showed a balance of minus 24.

Surveyors said there had been an acceleration in activity as 2005 drew to a close, with sales completions climbing to their highest level since September 2004, up 8 per cent in the final quarter.

And despite the festive season being traditionally a time for house-buyer hibernation, Rics reported that purchasers’ interest “held up well” in the run up to Christmas.

A supply and demand imbalance appears to be the main cause for price rises. Although the number of properties for sale rose in December, respondents to the survey said this was not sufficient to satisfy buyers and “market conditions continue to tighten.”

This will push prices higher over the next three months by a modest margin, the survey said, though part of this optimism is predicated on the belief that interest rates may be set to fall.

The strongest region for price rises is Scotland, with a positive balance of 41 per cent, followed by London on 10 per cent. Weakest are the East Midlands and East Anglia, which both registered a balance of minus 19 per cent.

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