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UK house prices hold steady as demand outstrips supply

House prices held steady in November, industry research showed on Thursday, as the number of people putting their homes on the market continued to ease.
According the latest Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance of surveyors reporting that house prices have risen over the past three months remained unchanged in November at +71, a touch above consensus for +70.

The new buyer enquiries balance rose to +13 from +11 in October, with demand recovering from a slight dip in September, when stamp duty returned to its traditional threshold.

But only a small number of homes are being put up for sale, with the new instructions balance holding steady at -18. The average estate agent had just 37 homes on their books, RICS found.

It said: “The continuing drought in new listings was a significant factor holding back the market nationwide.”

Simon Rubinsohn, the body’s chief economist, added: “Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant that any shift in the interest rate environment for new buyers.”

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The current strong imbalance between demand and supply likely will not be maintained next year. Mortgage rates jumped in November in response to the recent increase in risk-free rates, and they have further to rise.

“Granted the link between changes in mortgage rates and hose prices is not always firm. The share of household income absorbed by mortgage payments can oscillate, and currently it is only slightly above the long-run average. But with household real disposable income set to fall in 2022, and consumer confidence currently subdued, we think house price growth will fail to maintain its recent momentum.”

Pantheon Macroeconomics is currently forecasting house prices will flatline in the first half of 2022 before rising slowly in the second half.

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