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House prices still rising as supply dwindles

Available property is now at its lowest level for eighteen months, says the Royal Institution of Chartered Surveyors (RICS) and the stock of unsold properties on chartered surveyor estate agents' books has fallen by 12 percent since August. On average, each surveyor has just 61 properties on his books.

There is little to suggest that homeowners have been panicked into selling their properties despite speculation of further interest rate rises in 2004. The number of sellers continues to fall whilst property sales have risen, up 16% from August to November, leading to a further tightening of housing market conditions.

The number of sales completed in the three months to November has hit the highest level since February this year, picking up from a very low period in the summer. The average number of property sales recorded by each chartered surveyor estate agent in the run up to November is 31. Expectations for future sales are strongest in London and East Anglia.

As to be expected in the run up to Christmas, there has been a slight decline in the number of people looking to buy but the underlying demand remains fairly stable. In November, 6 percent more surveyors reported a fall in buyer enquiries than a rise on a seasonally adjusted basis, compared to a net 22 percent reporting a rise in October.

Price rises, on a seasonally adjusted basis, continue to be driven by northern English regions, the West Midlands and Wales. Some RICS members report competitive bidding occurring more frequently as people try to secure the best properties within their price bracket.

London market prices are strengthening following a weak market through much of 2003. Conditions are more subdued in the rest of the South of England with only modest price gains being reported.

The balance of surveyors reporting a rise in prices stayed constant at 35 percent in November.

Expectations for house price rises in the New Year remain robust in London and the North West, whilst elsewhere expectations are more subdued.

Surveyors have scaled back their expectations for future price rises as buyer activity may be affected by possible interest rate rises early in 2004.