Zoopla Property : Housing market slowly improves

What's the latest?

The property market is showing signs of slowly recovering but it continues to be held back by a lack of supply.

Demand increased for the third month running in November, although the number of potential buyers remained low by historical standards.

But the number of new homes being put up for sale was stagnant for the ninth month in a row, according to the Royal Institution of Chartered Surveyors (RICS).

The group warned that the shortage of homes on the market was likely to hold back transaction volumes next year.

Why is this happening?

The increase in demand led to a 9% jump in the number of properties sold - the highest level since February.

But with few new homes coming on to the market, the rise in sales has further exacerbated the property shortage.

One of the main factors behind the imbalance between supply and demand is the fact that the UK is building around 100,000 fewer new homeseach year than are needed to keep pace with demand.

Above: four-bedroom house for sale in Downton near Salisbury.

Who does it affect?

The ongoing mismatch between supply and demand is bad news for aspiring first-time buyers.

Not only does the shortage of homes on the market mean they face intense competition for properties from other buyers, but the situation is also pushing house priceshigher.

A balance of 30% of estate agents reported seeing rising prices in November, the highest level since April.

Most areas of the UK saw price rises during the month, with the West Midlandsand north westboasting the strongest gains.

Sounds interesting. What's the background?

Although sales picked up slightly in November, RICS expects a slow start to 2017 due to the lack of homes for sale.

Simon Rubinsohn, RICS chief economist, said: 'A key issue for the housing market is the slowdown in transaction activity since the spring.

'Although there are some signs that the numbers may begin to edge upwards in 2017, the combination of macro uncertainty, the on-going supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest.'

Estate agentsare still upbeat about prices, with a balance of 40% expecting property values to increase in the coming year across the majority of the country.

But they are less confident about London, with large properties in the capital expected to see the slowest price growth as tax changes continue to hit the top end of the market.

Top 3 takeaways

• The property market is showing signs of slowly recovering but it continues to be held back by a lack of supply.

• Demand increased for the third month running in November, but the number of new homes being put up for sale was stagnant for the ninth month in a row.

• RICS warned that the shortage of homes for sale was likely to hold back transaction volumes next year.

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