Optimism has been further buoyed by reports of an increase in new buyer enquiries and Government support for mortgage lending and the wider housing market.
While every region of England, Wales and Scotland reported price growth this month, their relative performance varies considerably. The rises across the regions range from just 0.1% in the North East to 1.3% in Greater London.
The London property market continues to lead the nation in all the key metrics. Home prices in the capital are going stratospheric (up 7.3% on last year), the time on market for unsold property continues to fall (median now 75 days) and prices look set to go much higher as the volume of new property being placed on the market is down 19% year-on-year.
As the country looks forward to the end of the long run of freezing temperatures, optimism about the UK property market is gradually improving. Nationwide, prices have risen 0.8% in the last month and, perhaps more importantly, the expected seasonal rises have materialised in every region of England, Scotland and Wales. However, it remains to be seen whether the northern regions of England, Scotland and Wales, which have suffered the worst house price deflation, can convert optimism into a real concrete recovery.
The reality for many homeowners is that, apart from London, price changes across the rest of the UK are failing to keep pace with the Retail Price Index (all items excluding housing) and therefore are going backwards in real terms. RPI is currently 3.6% whereas the average annual change in house prices across the UK (excluding London) is around 1.5%, a deficit of over 2%. The South East and the East of England are the only regions apart from London to come within a percentage point of the RPI and yet house price rises in these regions are still below inflation.
Usually the spring surge in new property sales listings exerts price pressure on unsold stock. However, the volume of new instructions is currently lower than seasonal expectations and has yet to apply any considerable pressure on the value of existing stock as evidenced by a fall in the total number of price reductions: down 17% year on year.
The London property market is showing no sign of slowing down, with an annual price rise now at almost 2.5 times the national average. While further price rises were expected, an additional 1.3% in one month is exceptional. For the average London homeowner, this now translates into a rise in equity value of over £2100 per month. With such price growth in the capital, the gap with the rest of the country continues to widen. Compared to annual negative price inflation in the North West (-0.9%) and even a healthy rise in the South East (+3.2%), London’s pricing continues to reflect an apparent insatiable demand for property in the region.
Doug Shephard Director at Home.co.uk said: "Another considerable price rise in the capital is truly exceptional and, combined with a relatively short time on market, is clearly excellent news for vendors.
"Potential buyers, already frustrated by the lack of choice, will have a tendency to ‘panic buy’ when faced with such spiralling home prices. It remains to be seen how high prices in the region can rise and with the combination of government backed low mortgage rates and a flood of overseas investors it would appear the sky is the limit.
"As London prices continue to climb, residents are being increasingly priced out of their neighbourhoods and will be forced to look to more affordable options in the surrounding regions. However, given the London focus of the government’s economic stimulus to date, the other regions of the country have been somewhat left to support themselves. Hopefully, last month’s Budget announcements will help stimulate the regions that need it the most."
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