Valuers have reported the strongest indicator of accelerating house prices for the last four years in the August index from the Royal Institution of Chartered Surveyors.

At a national level, a net balance of +44 per cent of respondents reported an increase in prices, the highest positive reading since 2016. 

This is up from a net balance of +13 per cent in July and marks a sharp turnaround compared to the reading of -33 per cent recorded in May. Virtually all parts of the UK are seeing prices increase. 

However in London valuers report prices have remained more or less flat over the past two months.

Other indicators of housing market activity were also showing strong positive readings in August, spurred on by the stamp duty holiday.

A net balance of 63 per cent of respondents reported an increase in buyer interest over the month. 

As buyer enquiries continued to rise, new instructions also saw a jump, with a net balance of +46 per cent of survey participants noting an increase in vendors listing property to sell.o

August was also the third successive month of strong growth in agreed sales with a net balance of +61 per cent of contributors seeing a pick-up.

However, longer-term sentiment remains more cautious.

Near term sales expectations are modestly positive, but twelve-month projections are still in negative territory, with a net balance of -17 per cent expecting sales to decline, (down from -10 per cent last time) . 

Concerns over the broader economic climate may be driving this view.

The impact of lockdown looks set to continue to shaping buyers’ preferences as 83 per cent of surveyors foresee demand increasing for homes with gardens or outside space over the next two years while 79 per cent predict rising demand for properties near green space.

Housing market activity continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

In the lettings market, tenant demand continued to rise sharply, while landlord instructions were broadly flat following a modest up-tick in July.

Rental growth expectations have strengthened in each of the past three months, with a net balance of +31 per cent of surveyors now anticipating an increase, up from +22 per cent in July.

RICS chief economist Simon Rubinsohn says: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. 

“More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. 

“Disaggregated data shows demand generally to run ahead of supply.

“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 garden and near green spaces has, if anything, increased since we tested the water in May.”

MT Finance director Tomer Aboody says: “Covid has definitely impacted buyers’ demands and priorities, due to future working conditions and being at home more, needing space for a home office and a garden or more room outdoors. 

“This has intensified the search for assets outside of London with good travel connections into the city, and with the stamp duty holiday also playing a part, more people are able to buy homes which are cheaper than in the capital.

“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’.

“Affordability can be an issue and this is where a more flexible approach needs to be taken by mortgage lenders, looking at applications on a case-by-case basis and taking into consideration factors such as deposit size, affordability and asset value. 

“If you combine these factors, many more people will be able to buy. 

“For example, 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.”

North London estate agent and former RICS residential chairman Jeremy Leaf says: “This latest outcome from one of the more reliable sources is not surprising bearing in mind the considerable improvement we have seen over the last month or so. 

“Buyers and sellers have more confidence and more money in their pockets taking advantage of the stamp duty holiday and low interest rates. However, we are not seeing prices rising sharply – they are kept in check by affordability concerns and an increase in supply which is giving more choice to serious buyers. 

“Greedy sellers will miss out if they don’t recognise the realities of the present market.

“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’.”