Financial News

LONDON (ShareCast) - Britain's housing market improved in September as demand continued to outstrip supply, with the number of surveyors reporting rising prices at its highest in well over two years.

The Royal Institution of Chartered Surveyors said the number of surveyors and estate agents reporting an increase in prices beat the number recording a fall by 22%.

That was much better than the 10% figure for August and easily beat economists' prediction for 15% this time. Today's number was the best since May 2007.

"A lack of supply is still underpinning the rise in house prices with new instructions to estate agents only edging up very gradually," said Rics spokesman Ian Perry.

"This imbalance between demand and supply suggests that house prices will move higher in the near term."

Separately, the Department for Communities and Local Government (DCLG) said the annual decline in house prices narrowed to 5.6% in August from 8.3% the month before.

The cost of a home rose for the fifth month in a row, up 0.5% to £196,510 in August. Prices are now up 5% from their low of £187,193 in March. "While house prices could very well rise further in the near term from their March/April lows, we suspect that they will be prone to significant relapses further out," said

But Howard Archer, chief UK economist at IHS Global Insight, remains cautious.

"We are highly sceptical that a sustainable major upward trend in house prices is now developing," he says. "Rising house prices since March/April means that affordability pressures are now moving back up at a time when still weak economic activity, sharply rising unemployment and low wage growth is negative for the housing market."