RICS: House Prices Strongest For 3 Years

House prices are continuing to defy gravity and increasing at their strongest rate for three years, according to the Royal Institution of Chartered Surveyors (Rics).

The Rics survey, which polls its member estate agents and is a closely watched indicator for house prices, said that 35% more members reported price increases in November than falls, the highest level since November 2006.

This came despite a modest increase in the number of properties coming on to the market.

And Rics said that if demand for properties continued to outstrip supply to this extent there was the risk of rapid house price inflation continuing into the New Year.

Rics spokesman Ian Perry said: 'For the fourth month in a row, the survey points towards prices rising, even though the general state of the economy would suggest that the housing market should not be faring as well as it is.

'Despite modest increases in the number of properties coming on to the market, it is clear that this is not significant enough to keep pace with the levels of demand.

'Buyer enquiries are continuing to grow and with the pace of job losses now easing, the risk is that the New Year could see a further wave of interest in the market.'

Rics said that despite the continuing supply and demand imbalance, new instructions to sell rose for the sixth month in a row to a two-and-a-half year. There were 28% more surveyors reporting an increase in enquiries from potential buyers than fall. This balance has slipped back over recent months, from a recent high of 66% in June.

The number of sales agreed per chartered surveyor estate agent remained broadly unchanged at an average of 19 during the three months to the end of November. But the sales-to-stock ratio - seen as a lead indicator of future prices - climbed to 31% and has now risen for the past 12 months.

However, surveyors felt slightly less upbeat about prospects for the market than they did in October, with a balance of 28% more predicting further price rises during the coming three months, down from 31% in October.

The housing market remains strongest in London and the South East, while it is weakest in the North, where prices were unchanged, and the West Midlands, where they recorded only 'the most modest of gains'.

Rics said prices are continuing to creep upwards in Scotland, boosted by a lack of homes for sale.

The latest Government house price report by the Department for Communities, also released today, showed the annual fall in house prices eased to 2.2% in October from 4.1% in September. Prices rose by 0.5% in October, the fifth consecutive increase but the smallest since May.