Date Published 29 April 2013
A house price increase this month has been fuelled by a shortage of stock – and by the roaring London market, which is now back to the top-of-the-boom levels of 2007.
Hometrack said this morning that house prices have gone up nationally by 0.3% this month, but by over 0.7% in London.
Taking London out of the equation, house prices have barely changed – for example, falling by 0.1% in the North-East and rising by 0.2% in Wales.
In London, and also the South-East, the proportion of the asking price achieved now stands at over 95% – a level not seen since the summer of 2007. Elsewhere, it averages 93%, a level consistent with flat prices.
Also in London, time on the market is now 4.6 weeks – last seen in October 2007, and far lower than anywhere else.
In the South, time on the market is an average of just under two months, while in the East Midlands it is around three months.
A lack of stock for sale is the key feature of the housing market, says Hometrack. This month, stock new to the market has gone up by just 2.8%. The imbalance between supply and demand is continuing to put upward pressure on prices.
Richard Donnell, director of research at Hometrack, said: `The real driver of price rises in April has been the London market where demand has grown three times faster than supply over the last quarter, and key market indicators, such as the time on the market, are now back to levels last seen in 2007.
`Demand for housing nationally continues to rise, albeit at a slowing pace with new buyer registrations growing by 3.1% in April, down from 4.6% in March. Buyer demand increased across all regions for a third month in a row – this is the same as last year but without the external stimulus of a Stamp Duty holiday.
`The new supply of housing for sale is failing to keep pace with demand. Over April, agents reported just a 2.8% increase in new homes coming to the market. In each of the last three months the growth in supply has failed to keep pace with demand, and this is providing strong upward pressure on pricing, particularly in those markets with the shortest selling periods.
`Would-be buyers are often sellers, and many potential purchasers are delaying putting their property on the market until they find a home to buy.
`These households are also waiting for signs of a sustained housing market recovery before registering with an agent to sell.
`Together, these two factors are boosting demand while keeping supply scarce.
`Another noticeable change has been a marked decline in reports of mortgage availability acting as a barrier to market activity – a direct result of the Government’s Funding for Lending scheme.`