A net balance of 44 per cent of respondents reported an increase over the month, significantly up from the 13 per cent reported in July and a stark turnaround from the -33 per cent back in May. The only region of the UK where surveyors did not report a rise was London, where prices have remained more or less flat over the past two months.
This price growth is being driven by an increase in demand from buyers. A net balance of 63 per cent of surveyors reported an increase in buyer interest for August, while supply is also up with a balance of 46 per cent of respondents reporting an increase in listings.
This has resulted in a third straight month of notable growth in agreed sales, with a balance of 61 per cent of surveyors reporting a rise. RICS noted that while the near-term sales expectations are generally positive, over 12 months the net balance drops to -17 per cent, likely due to concerns over the broader economic climate.
The survey also found that Covid-19 is affecting the desirability of certain properties, with 83 per cent of respondents forecasting increased demand for properties with gardens, 79 per cent predicting a jump in demand for those near green space, and 68 per cent suggesting homes with more private outside space will also be more sought after.
Simon Rubinsohn, chief economist at RICS, said there was a “strong uplift in activity”, though there are concerns that a pick-up in prices could add to affordability issues in some parts of the country.
He added: “Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with gardens and near green spaces has, if anything, increased since we tested the water in May.”
Rising confidence among buyers and sellers
Jeremy Leaf, former RICS residential chairman and now an estate agent, said that while he was seeing more confidence among both buyers and sellers, prices have not been rising sharply. Instead they are being kept in check by affordability concerns and an increase in supply, which is providing serious buyers with more choice.
He added: “Looking forward we don’t see much change at the moment, irrespective of the worsening economic news on the horizon and the possibility of a no-deal Brexit. On the contrary, the return to school and more going into work has increased the ‘why nots’ over the ‘whys’.”
Affordability issues require flexible approach from lenders
Tomer Aboody, director of MT Finance, said that the pandemic had changed buyers’ focus, increasing demand for properties with space with a home office and a garden, particularly those outside of London which enjoy good travel connections into the city.
He added: “What buyers want is the small village feel, where shops, cafes, schools and parks are available on their doorstep as they look to work more from home, whether they live in a city or not. This will push up prices in London’s many ‘villages’.”
He called on lenders to take a more flexible approach to assessing affordability, looking at applications on a case-by-case basis.
“Some buyers have a big deposit but can’t prove affordability and therefore cannot get a big enough mortgage, which can be unreasonable since a bigger deposit usually demonstrates that the buyer has been disciplined enough to save. A more common-sense approach to their finances would enable them to get the mortgage they need,” he continued.