Property prices in the UK continued to rise in May as the gap between rising new buyer inquiries and falling new instructions by sellers became the widest seen since November 2013, Royal Institution of Chartered Surveyors (RICS) data has shown.
RICS said prices had increased for the fourth month running in May as the stamp duty holiday continued to fuel demand.
However, it added that there were signs that more properties would be coming onto the market in the summer and that 12-month sales expectations were flat.
But, it did warn that there was “no sign of house price inflation losing any steam”, adding that agents are predicting rises over the short and long-term.
Simon Rubinsohn, RICS chief economist, said: “With the economy performing better than could have been expected even a short while ago and the cost of money still at rock bottom levels, the principal drivers supporting demand will remain in place even after the expiry of the stamp duty holiday.
“More challenging is the question of supply, a theme coming back strongly from respondents to the survey both with regard to the sales and lettings markets.”
Sundeep Patel, director of sales at specialist lender Together, added: “With both house price growth and prices up again in May, the demand for property continues to pick up the pace ahead of the summer months. House prices rose to +83% in May, up from +76% in April and 32% more respondents noted an increase from prospective buyers.
“Although, with today’s data showing -21% of respondents reported another fall in the number of new listings being brought to market and Andy Haldane’s, chief economist at the Bank of England, remark earlier this week about the UK property market being “on fire” – only reconfirms the widely reported market concerns over future supply and demand issues.
“That said, with the government’s First Homes scheme now launched and the new Planning Bill to prop up more regional housebuilding, it does seem as though there are a few boosts on the horizon for first-time buyers who have their sights set on getting on the ladder in the next few years.
“Specialist lenders will be crucial in supporting buyers’ property plans as we expect there to be more demand for flexibility post-pandemic, to meet borrowers’ evolving circumstances.”
Whilst Nigel Purves, CEO of Wayhome warned of a perfect storm for first-time buyers.
He said: “The solid increase in buyer enquiries last month (+32%) and house price growth (+83%), is a something of a perfect storm for those hoping to take their first steps onto the ladder.
“With the stamp duty holiday finally coming to an end, we may start to see these levels of activity ease off, but aspiring homeowners will be left wondering what impact this will have on their ability to own a home of their own.
“Moving forward, we need to see better, deeper support for reluctant renters who are ready to take their first step onto the ladder. New pathways are needed to ensure people are not out-priced and are able to access desirable homes that are suited to their long-term needs.”