Year on year prices in England and Wales have now increased by 7.5% and in Scotland by 5.8%, the figures from Home.co.uk show.
This takes the average asking price in England and Wales to £296,480 and in Scotland to £177,121 and with buyer activity increasing the firm’s index report suggests that prices will continue rising.
Asking prices are still rising strongly in Greater London, up 9.6% year on year and 0.5% month on month to an average of £552,878 while the East of England region is also robust with an annual rise of 12.8% and a monthly rise of 2% to £330,990.
The South East has seen asking prices rise by 9.5% year on year and 0.7% month on month to £392,712. Elsewhere in the country growth is more modest with Wales seeing annual growth of 1.9% and monthly growth of 0.8%, taking the average asking price to £185,527.
The index report also shows that the supply of property for sale is beginning to increase, up 4% year on year overall but up 22% in Greater London and the typical time on the market is up two days to 78 days over the last month across England and Wales, some nine days less than in May 2015.
It suggests that the anticipated slowdown following the extra stamp duty charge for buy to let property and additional homes is already fading away. ‘Buyer activity is up and prices continue to rise across the country. Overall, the property market is in better shape than last year,’ said Doug Shephard, director at Home.co.uk.
He explained that significant improvements in marketing times in the North suggest that these formerly stagnant regions are experiencing and uplift in demand. ‘Supply in the North East, North West and Yorkshire remains subdued and we expect prices to rise steadily over the summer months,’ he said.
‘Indeed, the total stock of property for sale remains historically very low despite an uptick in supply in London. Scarcity remains the key price driver. The acute supply shortage in the East of England is driving prices up and this region is now outpacing London and the South East in terms of home appreciation. We anticipate that prices will soon reach their affordability limits, as happened in London, and price rises will be more subdued next year,’ Shephard pointed out.
He also explained that market activity in London is slower now than back in 2014 when fierce competition for limited supply was driving up prices at an unsustainable pace. ‘However, the market still has significant momentum and sufficient demand remains to elicit more modest price rises. A notable increase in supply is currently providing more choice for buyers and is attenuating price rises,’ said Shephard.
He also pointed out that the underlying fundamentals of cheap borrowing and tight supply remain prevalent in the UK market and the only potential threat is the referendum in June on the future of the UK in the European Union. It is widely anticipated that if the country votes to leave then the housing market will see prices fall and mortgage costs increase.
‘I’m pretty clear that there will be a significant hit to the value of people’s homes and to the costs of mortgages. That is one example of the kind of economic impact that we would get from leaving the EU. Undoubtedly, any increase in the cost of borrowing would be bad for home values. Moreover, higher interest rates would likely put the entire economy into a tailspin,’ Shephard explained.
‘We are only just beginning to see the recovery of the northern regional property markets, all of which have yet to regain their 2007 valuations. Brexit would certainly jeopardise the important progress made in these regional economies and possibly throw many home owners back into the trap that is negative equity,’ he warned.
If the UK does not leave the EU he predicts that in the East of England prices will keep on rising quickly over the summer months and also rise in the South East with both regions reaching their affordability limits towards the end of this year as already seen in London.
He also predicts a similar price growth dynamic to take hold in the West Midlands, the South West and the East Midlands this summer, together with further significant price growth in 2017.
