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Short supply of homes pushing up average house prices

The average price of a new home in the UK has continued to rise on the back of supply and demand problems, according to the latest monthly survey report from Royal Institution of Chartered Surveyors (RICS). In its report, RICS said a shortage of new properties coming to market and the steady stream of buyers means competition between buyers is increasing, creating bidding wars that push up prices. This has been an issue for much of 2015, having previously reported cases where there has been as many as ten buyers battling for every one property on the market. RICS said the issue was driving prominent price rises in East Anglia, the South East and the East Midlands. However, in London, the price of homes is slowing slightly, as it has been for four months in a row. The situation had been exacerbated further by a slowdown in the number of homes coming to market over the last ten months. In November, as many as eight per cent more people said there were fewer homes coming to market than in the month before. Looking forward, this is likely to mean two things for the housing market in general. On one hand, the government needs to do more to improve the supply of homes available. This is something that has been happening in recent months, especially with the announcement of more than 400,000 new homes over the next few years in the Autumn Statement. On the other hand, we are also likely to see another significant shift towards the rental market. Already this year, the UK has seen home ownership fall below 65 per cent for the first time in decades. If prices continue to rise under pressure from supply and demand problems, this number could fall further.