U.K. house-price growth eased in January, according to an index by the Royal Institution of Chartered Surveyors, which said a shortage of properties for sale will continues to support values.
A gauge declined to 53 from 56 the previous month, RICS said in a statement in London today, citing a survey of property surveyors. The median estimate in a Bloomberg News survey of 20 economists was for an increase to 58. A measure of the number of properties for sale fell to the lowest since July 2012.
An improvement in credit conditions along with the lack of homes for sale has underpinned prices over the past year, raising concerns about the sustainability of the market. Bank of England Chief Economist Spencer Dale said on BBC radio today while he doesn’t think the U.K. is heading toward a housing bubble, officials will watch developments “very carefully.”
“With more people now in a position to buy a home than at any point over the past few years, there are simply not enough properties to satisfy demand,” said Peter Bolton King, RICS global residential director, said in the statement. “The upshot of this is increasing prices in many areas and this looks set to continue for the foreseeable future.”
Part of the decline in the RICS index in January may have been weather related, according to Rob Wood, an economist at Berenberg Bank in London. The measure of new buyer enquiries fell to 31 from 48 in December, the lowest in eight months. The measure of new properties coming on to the market dropped to minus 3 from 3.
Wood said house prices may increase 10 percent this year, in part helped by “rock bottom” interest rates after BOE Governor Mark Carney signaled yesterday he’s in no rush to raise borrowing costs.