Homes in the UK selling at their fastest pace since 2007, research shows

Home asking prices across England and Wales leapt 1.5% over the last month, the greatest monthly price hike seen since May 2007, and homes are selling at their fastest since 2007, according to the latest research.

In Greater London home prices surged even higher and are up 3.1% since January and up 16.7% year on year, new data from Home.co.uk shows.

Homes are also selling faster with the typical time on market now three days less than in February 2013 and the supply of properties for sale are down 11% nationwide and down 28% in Greater London since this time last year.

Overall prices are not only on the rise in every English region, but also in Scotland and Wales and demand is being driven by low mortgage rates and the government’s Help to Buy scheme.

The fierce competition for properties is even more so in London and this has now driven the annualised asking price rise to 16.7%. The firm believes that this stock drought, whilst most severe in and around the capital, continues to worsen across southern and eastern regions of England and Wales as well.

However, significantly more vendors entered the market last month in Yorkshire, the North East and the North West. It adds that rising supply in these regions will serve to attenuate any further price rises.

Despite this, overall stock levels remain severely depleted across England and Wales and the number of fresh sales stock that entered the market last month was down 11% year on year.

The accelerating pace of price rises suggests that the London property market will easily achieve price growth of 20.2% in 2014, according to the firm. Only around 55% of the current for sale stock in this region is being marketed below the £600,000 threshold for the Help to Buy scheme. As prices continue to rise, this portion of the market will almost certainly become a minority.

Also in London gazumping and price rises whilst a property is on the market are now commonplace, much to the ire of desperate buyers who have 28% fewer properties to choose from compared to just one year ago.

Buyer demand has reduced the typical time on market in London to just 67 days, the lowest February figure since 2007. Elsewhere, marketing times are also falling as spring approaches. East Anglia witnessed the largest monthly drop of 12 days to give a current median marketing time of 102 days, as this regional market picks up momentum. Time on market remains essentially unchanged in the North East, Scotland and Wales since last month, as these areas have yet to see the expected seasonal upturn in activity.

‘Home prices are rising unsustainably fast in London and the South East. Rapidly rising house prices precipitate a groundswell of support for current economic policy and makes banks and building societies' lending books look much more solid,’ said Doug Shephard, director at Home.co.uk.

‘However, inflating the cost of housing does nothing for the nation's international competitiveness and will only hasten the current tide of quality jobs heading overseas. Until interest rates return to normal levels and government incentives for buyers cease, we remain in an artificial market subject to the vagaries of government policy and economic tinkering on an unprecedented scale,’ he added.

Separate research from Hamptons International confirms that the time taken from advertising a home for sale to agreeing a price has fallen to its lowest level since 2007. Its figures shows that in the last quarter of 2013, it took on average less than eight and a half weeks to agree a price, nearly two weeks less than the same period in 2012.

It also confirms that agreeing a price is speediest in London, with a property averaging less than five and a half weeks on the market before an offer is accepted.  It takes more than double this time to agree a price in Wales, where it takes an average of almost 14 and a half weeks to agree a sale.

While the time taken to agree a price is at its lowest level in six years, capacity restraints and more stringent mortgage application processes have lengthened the time between an agreed sale and exchange, increasing from 10 weeks in 2012 to 11 today, the research also points out.

But the net result is that time to exchange has fallen by five days to just under 21 and a half weeks in 2013 compared with 2012.