New instructions declined in April for the eighth month in the last nine, contributing to the very low levels of supply.
UK home sales dropped by 3.4% between March and April to 97,020. Nonetheless, sales in the three months from February to April were marginally higher (+1.3%) than in the preceding three months.
House prices saw annual growth of 8.6%, and grew by 2.0% over the last three months, but dipped by 0.1% between April and May.
However mortgage approvals continue to pick-up. The volume of mortgage approvals for house purchases increased by 9.9% in April. Whilst approvals in the three months to April were 6.6% higher than in the preceding three months (November 2014-January 2015), they were 4.3% lower than in the same three months a year ago.
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to May were 2.0% higher than in the preceding three months. This measure of the underlying rate of house price growth eased for the second consecutive month, falling to its lowest since January. Annual house price growth, however, rose marginally from 8.5% in April to 8.6% and continues to be in the narrow range of 8-9% where it has been throughout 2015 so far.
“Housing supply remains extremely tight with the stock of properties available for sale currently at its lowest level for many years. At the same time, ongoing economic recovery, increasing employment, real earnings growth and very low mortgage rates are all supporting housing demand. This combination has kept annual house price inflation well above earnings growth although activity levels are subdued.
“The imbalance between supply and demand is likely to continue to push up house prices over the coming months. Looking further ahead, the increasing level of house prices in relation to earnings is expected to dampen house price growth.”
Jonathan Samuels, chief executive of Dragonfly Property Finance, added:
"Housing demand, as the Halifax says, is strong — but supply appears to have gone AWOL.
"The strength of demand was certainly reinforced by the Bank of England's April mortgage approvals data, which showed a spike and suggests an increase in transactions in the months ahead.
"Demand, understandably, is being driven by the often mind-blowing rates available on mortgages today, the low cost of living and a solid jobs market.
"Unless supply improves materially, it's hard to see how prices will not continue to rise throughout 2015, albeit at a more moderate pace relative to last year.
"The denouement surrounding Greece and the Eurozone could also impact the UK economy, and therefore property market. But until the supply side problems resolve themselves, expect prices overall to continue to rise."
