The latest data research report from Hometrack says that the supply of homes for sale fell by 1.6% and this chronic lack of supply is driving price growth.
This follows a 0.3% decline in September and growth in new sales being agreed is running at 45 to 5% per month which is continually eroding the stock of homes for sale.
In contrast, levels of demand have grown by 3% in the last two months. ‘Improving confidence amongst buyers has been fuelled by low mortgage rates and positive news on a recovering housing market,’ said Richard Donnell, research director at Hometrack.
The strongest increase in demand over October was seen in London with growth of 6.4% and Donnell said that this is maintaining the pressure on prices which grew by 0.8% over the month, the same as September and down slightly on August when it was 0.9%.
He pointed out that price rises have been accelerating across the South East where they increased by 0.7%, up from 0.6% in September. Across all other regions prices grew at a below average rate, with the exception of the North where prices remain static.
‘The net result of the growing scarcity has been achieved prices getting closer to asking prices. The proportion of the asking price being achieved has jumped to 95.2%, close to its all time high of 95.7% from June 2007. The proportion has grown across all regions in recent months as buyers have been willing to pay a larger proportion of the asking price to secure a sale,’ explained Donnell.
‘In the face of short supply, agents will continue to push asking prices ahead but the question is how much further buyers are willing to go to meet higher prices? Vendor expectations over prices are increasing and new supply is likely to come on to the market at higher prices,’ he added.
The report reveals that one clear trend in the last month has been a jump in the time on the market across all regions. The time between a property being placed on the market and then going under offer. The national average time to sell increased by 0.4 weeks to 8.3 weeks following steep declines in the last nine months. This was accompanied by an increase in the number of viewings needed to achieve a sale, up from 9.8 to 10.2.
Donnell also said that longer sales periods are likely to be a combination of a reducing quality in the stock of homes for sale and increasing buyer sensitivity in the face of strong price rises and widespread debate over a housing bubble.
‘Talk of a national housing bubble is over done but any weakening in demand, against the backdrop of tight supply, will result in a slowdown in house price growth,’ he added.
The number of markets registering price rises has fallen 5% in the last month, from 41% in September to 36% in October. London continues to be the strongest market with 75% of areas registering higher prices in October. The number of markets registering higher prices.
declined across Southern England, the Midlands. In the northern regions price rises continue to spread as the market recovers off a low base.
