Residential asking prices in the UK increased by 0.7% since September, led by the East of England, but sellers could be being too optimistic with their pricing, says the latest index report.
Month on month asking prices increased by 0.7% in England, by 0.3% in Scotland and by 0.2% in Wales and are 4.4%, 5.3% and 1.3% higher year on year respectively.
The data from Home.co.uk also shows that supply is up by 11% year on year but much higher in the South and East of the country with a rise of 19% in London, 23% in the South East and 30% in the East of England.
A breakdown of the figures show that the biggest month on month rise was the East of England at 1.1% and taking the average property price to £342,915, some 11.5% higher than a year ago.
The next highest monthly rise was 1% in the South East and the East Midlands to an average of £394,837 and £211,328 with an annual rise of 4.2% and 5.5% respectively. Greater London saw prices rise by 0.8% month on month and 1.5% year on year to £538,775, followed by the South West, up 0.7% and 5% to £309,168.
Elsewhere the month on month growth was more muted with asking prices up 0.5% and 6.5% in the West Midlands to an average of £225,664, by 0.1% in the North West month on month and 4.2% year on year to £186,746, by 0.2% and 3% in Yorkshire and Humber to £181,459, and by 0.2% and 1.1% in the North East to £155,577.
The report points out that a key warning sign showing the fragility of the current market is that price cutting of properties whilst on the market has risen to a three year high across the UK and the firm is predicting price falls to come.
‘Supply is increasing rapidly in the East, South East and London. What’s more, the pricing of these new instructions is looking rather optimistic,’ said Doug Shephard, director at Home.co.uk.
He explained that London was the first to show an uptick in properties entering the market and the total stock for sale in the region has risen by around 24% which means that over supply is a danger and in the neighbouring regions, which would trigger a rapid downward spiral in prices.
‘Foreign investment was the saviour of the London market following the onset of the financial crisis, but Euro or dollar based investors will not be tempted back until sterling stabilises and that may take some considerable time,’ he pointed out.
Shephard believes there are also concerns about currency fluctuations and whether the Bank of England will have to intervene and raise interest rates to support the Pound which he thinks would be disastrous for the highly leveraged UK property market.
