Demand in the capital has grown three times faster than supply over the last quarter and some of the survey’s key indicators for London are now back to levels last seen in 2007.
Outside London, demand rose across all regions for the third month in a row. This follows the same pattern as last year but importantly without the external stimulus of a stamp duty holiday.
A lack of housing for sale is a key feature of the market. For the last three months supply of new housing has failed to keep pace with demand. April saw just a 2.8% increase in new homes coming to the market. This supply/demand imbalance continues to put upward pressure on prices.
The time on the market indicator has fallen by almost a week since the beginning of the year - from 9.9 weeks in January to 9.1 weeks in April.
In London the time on the market is almost half the national rate at 4.6 weeks – a level last seen in October 2007.
The upward pressure on house prices has been limited to areas where the time on the market is above average. Outside London price rises remain below average ranging from a fall of -0.1% in the North East to a rise of 0.2% in Wales. In London average prices grew by 0.7% over April.
In London the proportion of the asking price achieved now stands at over 95% - a level not seen since summer 2007. The ratio is also over 95% in the South East; in all other regions it averages 93%, a level consistent with flat prices.
Commenting on the latest monthly national housing survey, Richard Donnell, Director of Research at Hometrack, said:
“House prices posted another strong gain in April increasing by 0.3%, following a similar increase in March. Improved market sentiment and a lack of supply for sale are key features of the market, providing support to underlying pricing levels across the country. The news of a rise in economic growth over the first quarter along with government measures to support housing is likely to boost market sentiment further over the
coming months.
The real driver of price rises in April has been the London market where demand has grown three times faster than supply over the last quarter and key market indicators, such as the time on the market, are now back to levels last seen in 2007.
Demand for housing nationally continues to rise, albeit at a slowing pace with new buyer registrations growing by 3.1% in April, down from 4.6% in March. Buyer demand increased across all regions for a third month in a row - this is the same as last year but without the external stimulus of a stamp duty holiday.
The new supply of housing for sale is failing to keep pace with demand. Over April agents reported just a 2.8% increase in new homes coming to the market. In each of the last three months the growth in supply has failed to keep pace with demand and this is providing strong upward pressure on pricing particularly in those markets with the shortest selling periods.
Would-be buyers are often sellers, and respondents to the survey report that many potential purchasers are delaying putting their property on the market until they find a home to buy.
These households are also waiting for signs of a sustained housing market recovery before registering with an agent to sell. Together these two factors are boosting demand while keeping supply scarce. Another noticeable change in responses to the survey has been a marked decline in reports of mortgage availability acting as a barrier to market activity - a
direct result of the government’s Funding for Lending scheme."
