House prices face 2016 hangover - with confidence hit expect a sluggish market at best next year. The housing market is likely to get off to a slow start in 2017 amid a continued lack of properties for sale, according to surveyors. The Royal Institution of Chartered Surveyors (Rics) said a net balance of 30% of surveyors reported house prices rising rather than falling in November - the strongest figure seen since April. Demand from home buyers also picked up, with 13% more surveyors reporting a rise in new buyer enquiries rather than a fall. But a combination of tight supply conditions and a growth in the volume of houses being snapped up has led to a further erosion in the supply of homes for buyers to choose from, Rics said. Its report said that surveyors across most parts of the UK "highlight the supply shortage as a very dominant feature of the market at present".
The volume of new properties coming on the market was flat in November, with a 0% overall change recorded as an increase in homes coming to market in some parts of the UK offset falls seen elsewhere. The growth in buyer demand led to a rise in sales being agreed, with a balance of 9% of surveyors reporting sales increasing rather than falling. Looking ahead, a balance of 14% of surveyors across the UK expect house prices to increase rather than fall over the co chief economist at Rics, said although there are signs that sales activity may edge up towards the New Year, the ongoing shortfall in the supply of homes and recent tax changes affecting buyers suggest that any pick-up will be "relatively modest".
Changes to the structure of stamp duty have made the tax more expensive for some people buying top-end homes, and there have been suggestions this has impacted on the London market in particular. Meanwhile, a stamp duty hike for buy-to-let investors, which was introduced in April, has also affected the market. This is significant not just for the housing market itself but also for the wider economy given how much of consumer spending is tied in with home purchases. And a net balance of 40% of surveyors expect to see house prices increase rather than fall over the coming year.