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House prices up for second month in a row

The time on the market – an indicator of the relative strength of the market – has fallen slightly across all regions in the last quarter but still stands at less than six weeks in London and around 12 weeks across all regions away from the south.

The impetus for price rises over the last two months has been higher demand. New buyer registrations over the last three months have grown almost 25%. The usual seasonal uplift in demand together with the added impetus from the recent stamp duty holiday have generated the uplift in recent market activity.

But the impact of these short term drivers of housing demand is starting to dissipate. New buyer registrations grew by just 2.1% over April, half the level recorded in March (4.4%).

Supply grew by 4.8% in April, up from 3.6% increase in March – in the last three months supply has grown by almost 19%. This follows a similar pattern to previous years when an improvement in demand and sales led to more properties coming to the market.

If April’s slowdown in demand and rising supply continues over the coming months, we will begin to see an impact on price changes.

The balance of supply and demand recorded by the Hometrack survey leads prices by up to 3 months.

While the balance has improved over the last three months, it remains (just) in negative territory. But with conflicting reports over the strength of the economy and renewed fears over the prospects for the Eurozone, buyer confidence could fall resulting in a continued slowdown in demand over the coming months and a flattening out of prices.

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