"This month’s 1.3% uplift is an indicator of a shortage of suitable property for sale in many parts of the country, with strong demand for the right property at the right price."
Average house prices have jumped up 1.3% (+£3,877) in March - a figure that has only been beaten once since 2007, according to the latest Rightmove house price index.
The rise matches the monthly increase recorded in last year’s buy-to-let-boosted period.
While market fundamentals remain robust, the annual rate of increase in the price that new-to-the-market sellers are asking for their property remains modest at 2.3% for the second consecutive month. A year ago in March 2016 year-on-year prices rose at 7.6%, more than three times this rate.
Breaking with the tradition of the market often being driven by the northern or southern halves of the country, it is the two Midlands regions that clearly lead the way in both the monthly and annual price metrics.
The fastest pace of price rises anywhere in the country compared to this time a year ago is in the East Midlands, up by 5.7% (+£10,801) year-on-year and 2.1% (+£4,205) this month. The price of property coming to the market in the East Midlands is at a record high, breaking through the £200,000 barrier for the first time to £200,620. The West Midlands region has the second highest annual increase with prices up 4.2% (+£8,658) and matches the East Midlands’ 2.1% monthly rise (+£4,321). The region with the next biggest year-on-year rise is the East of England at 3.9% (+£12,885), held back by a much more subdued 0.8% (+£2,712) monthly rise.
Miles Shipside, Rightmove director and housing market analyst, commented: “Since the start of the decade, the average March price rise has been 0.9%, so this month’s 1.3% uplift is an indicator of a shortage of suitable property for sale in many parts of the country, with strong demand for the right property at the right price. Since 2007 we’ve only once seen a larger rise than this in March, and we are also keeping pace with last year’s rise, which had the added momentum of investors looking to beat the Stamp Duty tax deadline of April 1st.
“The price-rise crown has shifted from its previous strongholds. The pace is no longer being set by the more affluent commuter-belt south, including London with its international appeal. Neither is it set by the cheaper north driven by a mass of investors swooping on high buy-to-let yields. As markets in other areas of the country become more mature and run out of price-rise steam and froth, the fundamentals of the Midlands have come to the fore. Accessibly and conveniently located in the middle of the country, the area offers mid-range and relatively affordable prices at an average of around £200,000, whilst also exhibiting local economic breadth and strength. As other parts of the country suffer from varied factors such as highly-stretched affordability, changes in sentiment and increased economic uncertainty, it is the Mighty Midlands that is the current powerhouse of price rises.”
Brian Murphy, Head of Lending for Mortgage Advice Bureau, added: “The data suggests an average month on month increase of 1.3% on properties coming to the market, suggesting that consumer confidence and demand in bricks and mortar, coupled with a paucity of stock in many towns and cities, is leading to asking prices remaining steady if not increasing in some areas, most notably the East and West Midlands.
"Given encouraging activity levels last month, this isn’t a huge surprise and is in line with normal seasonal trends – in fact, the average March price rise over the last few years according to Rightmove data has been 0.9%, so in this respect, so far this year asking prices would appear to be performing above expectations. That said, the annual increase reported by Rightmove of 2.3% is more modest than previous years, but this in itself will possibly be reassuring for many. This is because we need to be mindful of affordability and any ongoing, significant increases in house prices could create a turbulent market that many would seek to avoid, as it would price many purchasers out of the market.
"Overall, it’s too early to tell if we will see a blooming Spring market over the next couple of months, but if the figures continue as they have so far in March, it’s possible that we may see a balmy picture rather than a stormy outlook as we move towards what is normally one of the busier times of the year."