UK house prices rise at fastest rate in year

British house prices rose at their fastest rate in a year, last month, and a shortage of homes is likely to push prices higher over the next year, a body representing property valuers said yesterday.

The Royal Institution of Chartered Surveyors (RICS) said its monthly house-price balance rose to +44 in July, from +40 in June, the highest since July, 2014 and a bigger rise than most economists polled by Reuters had expected.

Buyers showed the highest demand for properties in six months, while those who owned homes seemed reluctant to move, because of the limited choice of other properties available, RICS said.

“A renewed acceleration in house-price inflation, allied to a fairly flat trend in sales activity, highlights the very real challenges being presented by the housing market,” RICS chief economist, Simon Rubinsohn, said.

RICS said the UK government had not taken sufficient action to reduce planning restrictions on new housing and other factors responsible for the lack of new homes being built.

“A coherent and coordinated house-building strategy is required,” RICS head of policy, Jeremy Blackburn, said. Sterling strengthened against the euro, halting a two-day decline, on the back of the RICS report. UK government bonds fell as stocks rose across Europe, damping demand for the safest assets, after China’s central bank eased concern of a disorderly devaluation of yuan. In the past two days, the euro had climbed versus most major currencies, including sterling, as investors spooked by China’s surprise devaluation unwound so-called ‘carry trades’, in which they used the common currency to fund higher-yielding assets.