The pace of house price increases slowed in August as the number of new properties coming to market, the number of buyer enquiries and the number of agreed sales all fell, according to the latest index from the Royal Institution of Chartered Surveyors.

New buyer enquiries fell for a second month in a row, with a net balance of -14% of respondents saying they had seen even fewer house hunters compared to -9% reading in July.

New listings have been down for eight out of the last nine months, with  a net balance of -37% of property professionals reporting a fall in August.

Stock levels on agent’s books have dropped from an average of 42 homes per branch at the start of 2021, to stand at 38 in August, which is close to a record low.

With demand outpacing supply, respondents continued to report strong rates of house price inflation.

A net balance of +73% of professionals said prices had increased since the previous month’s survey, compared to +78% who said the same in July.

However, looking at the year ahead, a net balance of +66% said they don’t expect prices to continue rising nationally, the same reading reported in July.

Over the next three months, +4% of respondents expect sales volumes to stabilise and +7% predict that modest growth will return over the next year. 

On a regional level, the responses show sales expectations for the year ahead are most positive across London, Northern Ireland and the South East.

Tenant demand accelerated in August, with a net balance of +66% of respondents reporting an increase in enquiries, up from +58% in the previous month,

However, the ongoing decline in landlord instructions resulted in a continuing imbalance between supply and demand, leading a net balance of +64% of respondents to predict that rents will go up over the next three months.

Rics economist Tarrant Parsons says: “The latest survey evidence inevitably points to market activity taking a breather following the flurry of sales seen ahead of the tapered stamp duty holiday withdrawal. 

“That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.

“Nevertheless, given the real shortfall in new listings becoming available of late, there remains strong competition amongst buyers and this is maintaining a significant degree of upward pressure on house prices. “What’s more, prices are expected to continue to climb higher over the year to come, albeit the pace of increase is likely to subside somewhat in the months ahead.”

North London estate agent and former Rics residential chairman Jeremy Leaf says: “We are finding demand has reduced partly because the tapering of the stamp duty concession prompted the bringing forward of buying decisions and also so many of our customers have been on holiday.  

“As a result, prices as well as transaction numbers have softened but not corrected.

“In the past few weeks, the return to work and school has contributed significantly to renewed market activity.

“Encouragingly, we have also noticed an increase in valuation appraisals which should help to redress the sharp imbalance between supply and demand as well as further help to keep prices in check.”

MT Finance director Tomer Aboody adds: “With a reduced supply of housing stock available for sale, prices are expected to continue rising but at a slower pace. 

“This isn’t surprising as the unprecedented percentage growth over the past 12 months isn’t sustainable, nor is it good for the overall health of the market.

“As long as borrowing remains cheap, growth will remain strong, with buyers taking advantage of lower mortgage rates and increased affordability. 

“The stamp duty holiday incentive has proven to be an overwhelmingly successful trigger in getting the housing market moving. 

“It has increased productivity, providing a certain indication as to where and how the government can encourage future activity by reforming stamp duty levels.

“One possible option is to reduce or remove completely the stamp duty paid by downsizers to encourage the older generation to sell their bigger homes while not facing heavy taxation on moving.”