RICS

Maybe, to answer the question 'why aren’t house prices rising faster?' we need to pick up a book on rocket science and cast it aside, and instead look for a book on the bleeding obvious.

House prices may not be rising that fast, but they are already very expensive. Should we be that surprised?

If you compare average house prices with average wages, you end up with a ratio of 5.81 – that’s according to the Halifax index. It has been higher in the past, but not very often. The all-time high for this index was set in 2007, when the ratio was around half a percentage point higher than it is now, or to put it another way, the ratio is not far off its record.

In fact, it turns out that demand for houses is very low. The RICS index tracking new buyer enquiries stood at five, you would need to rewind the clock many years to find a time when new enquiries were rising at a reasonable pace.

It is just that the index tracking new sales instructions, an indicator of supply, fell to minus 11 in January.

In short, demand is poor, supply is even worse.

Sales per agent stood at just 45.4 in January, compared to 69.3 five years ago.

And if you look at a RICS index tracking the stock of properties for sale, you find that houses for sales per surveyor are down to just 17.2, they have been lower than that, but then earlier this decade that number was nearer 25, in 2007 it was not far short of 30.

Question, when does a snail win a race? Maybe when it is racing a snail that is even slower. And that may serve as a pretty good metaphor for what’s going on with house prices, with demand represented by the first snail, supply the second.