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House price growth continuing to slow ‒ RICS

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The rate of house price growth dipped in August according to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS).

A net balance of plus 73 per cent of survey respondents reported rising prices, compared to the plus 81 per cent seen in recent months.

This was coupled with agents reporting falls in the number of properties making it to market, with a net balance of plus 37 per cent of those surveyed saying listings had fallen over the last few months. Listing levels have fallen for eight out of the last nine months, resulting in estate agent stock levels dropping close to record lows.

RICS noted that new buyer enquiries fell for the second month in a row as well, with a net balance of negative 14 per cent of respondents saying they saw fewer house hunters, a further decrease from negative nine per cent of respondents in July.

Tarrant Parsons, economist at RICS, said that the latest results inevitably pointed to the market “taking a breather” following the frenzied activity seen ahead of the first Stamp Duty holiday deadline.

He continued: “That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.”

Tomer Aboody, director of MT Finance, said that while the scale of recent price growth was unsustainable, the fact that there is a reduced amount of housing stock available for sale meant that prices would continue rising, albeit at a slower pace.

Aboody added that the fact that borrowing is still relatively cheap will also boost house prices.

He continued: “The Stamp Duty holiday incentive has proven to be an overwhelmingly successful trigger in getting the housing market moving. It has increased productivity, providing a certain indication as to where and how the government can encourage future activity by reforming stamp duty levels.”

Jeremy Leaf, a former residential chairman of RICS and now an estate agent, said that he was seeing demand reducing in part because of the tapering away of the Stamp Duty holiday, but also because many would-be buyers and sellers have been on holiday.

Leaf added: “In the past few weeks, the return to work and school has contributed significantly to renewed market activity. Encouragingly, we have also noticed an increase in valuation appraisals which should help to redress the sharp imbalance between supply and demand as well as further help to keep prices in check.”

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