Demand for housing grew by 3% while the supply of homes for sale declined by 3.5% - over the last six months demand has grown by 10.2% yet supply has declined by -0.6%. The supply/demand balance varies by region. The greatest imbalance and highest price increases are in London and the South East where prices are up by 4.8% and 3.2% in six months. In contrast the balance is smaller in northern regions where price growth has been less than 0.5% over the same period.
The major change in the last 12 months has been a shift from falling house prices in regions outside London to prices rising steadily off a low base as demand picks up. Much of the house price growth outside London remains muted and far from what could be described as a ‘housing bubble’.
The average time on the market nationally is 8.4 weeks. Seven out of ten regions have an above average time on the market of over 10 weeks. London has the lowest (3.6) followed by the South East (5.0).
The percentage of the asking price achieved was down slightly from a recent high of 95.2% to 95%. The softening was seen in regions outside London and suggests early signs of increasing price sensitivity.
Help to Buy has delivered a confidence boost the market. The impact of the new build part of the scheme on general house prices is limited as it supports less than 3% of all sales. The impact of the mortgage indemnity part of the scheme could well fall short of expectations given the higher cost of these mortgages.
While Help to Buy has boosted sentiment and increased activity, low mortgage rates have provided homeowners more ‘buying power’ than at any time previously. The change to Funding for Lending is likely to result in mortgage rates drifting higher. This will scale back the potential buying power of households which is important to keep price rises in check.
