However, there are signs of growing price resistance on the part of buyers in London, which could check the rate of house price appreciation in the coming months, according to the monthly report from property analysts Hometrack.
It also shows that nationally demand for housing continues to increase, rising by 3.3% but the time to sell has increased from 2.7 to 3.4 weeks and there are declines in the proportion of areas registering higher prices compared to the second half of 2013.
The report also points out that new supply continues to grow at a slower rate than demand, rising by 1.9% over the month. This is sustaining an extended supply/demand imbalance that has been in place for the last six months.
Market conditions continue to strengthen in the regions outside London and 48% of postcodes registered higher prices in April, three times higher than the level a year ago and the highest for a decade and the time on the market has fallen to its lowest level since June 2007 at 6.3 weeks.
The report also reveals that more buyers are prepared to pay the asking price with the proportion of the asking price achieved jumping to 96.7%, the highest level since September 2002.
According to Richard Donnell, Hometrack director of research, the impetus for house price growth looks set to continue to transition into the regional housing markets over 2014. ‘What is less clear is the scale of pent up demand that exists to sustain further house price increases.
The outlook for the economy and interest rates along with the willingness and ability of households to take on mortgage debt are the primary factors that will influence the outlook over the medium term,’ he explained.
He pointed out that the pick up in the coverage of price rises is very clear cut after six years of falling then static prices. ‘Improving market sentiment and low mortgage rates are supporting increased activity. The time on the market indicator delivers a strong indication for the overall health of the market and this measure has declined below 10 weeks across all regions,’ said Donnell.
The greatest declines in the time to sell over the last year have been seen in East Anglia, South East and Wales. In the North and Yorkshire and Humber the decline has been less marked and price rises remain below average.
Donnell also said that in London, the impetus for above average house price growth is originating from the lower value markets that offer relative value for money. South East London, for example, has an above average rate of growth at 0.9% and one of the lowest time on the market levels nationally at 1.9 weeks.
But the latest survey reveals early signs of growing price resistance in the London market in the face of recent, rapid increases in residential values. The time on the market indicator is up from 2.7 to 3.4 weeks over the last month with sales taking longer to close.
The proportion of markets registering price gains each month is starting to soften. Two thirds of London postcodes registered a price gain in April compared to an average of 76% over the final six months of 2013.
‘While these changes indicate very strong market conditions, they suggest that buyers are starting to become less willing to bid up the cost of housing at recent rates. Widespread media speculation over the sustainability of price increases in the London housing market is likely to be having an impact on sentiment,’ Donnell explained.
‘The supply of housing for sale in London is starting to rise off a low base, up 2.5% in April compared to 1.9% nationally. New supply at very full prices will only exacerbate the sensitivity of buyers to pricing levels in the market. It is important to remember that London has seen a pick up in house prices that has been running for the last four to five years, starting in the central London market. The regional markets have only started to register a sustained pick up in activity and prices for the last 15 months with the turnaround starting in January 2013,’ he added.
