The mix adjusted average asking price is now £241,710, 0.6% up in July compared to June and have risen steadily since the start of the year, according to the latest index from Home.co.uk.
Price growth is now being recorded across most of the UK although the figures show that the regional picture remains very diverse. London prices continue to soar at more than twice the rate of any other region while the Northern regions, Wales and Scotland continue to exhibit the poorest performance. The worst performer over the last 12 months is the North West which experienced a price fall of 0.2%.
The volume of new properties entering the market last month was down 4.4% overall on June 2012, although it should be noted that stock trends do vary considerably across the country. At one end of the scale, new stock in the Midlands, Yorkshire and the North East has risen compared to last year and this will serve to suppress price growth. At the other extreme, annual price rises in Greater London are being driven by a 22% fall in new stock compared to last year.
Annual price growth has now been recorded for 20 consecutive months and the current average price is just £4,441 lower than the peak price recorded in August 2007.
The firm says that should economic conditions continue to gradually improve, thus maintaining the current rates of house price growth, the 2007 peak may well be surpassed before the end of 2013.
However, the stark reality is that the national property market has become highly polarised since the banking crisis. Over the last five years, Greater London prices have increased 8.5% whilst the average price in Wales, the North West and Scotland have fallen by 8.3%, 8.6% and 8.9% respectively and, consequently, many home owners will still be in negative equity.
The firm points out that owing to the current slow rates of price growth in the poorer performing regions, it is likely to be several years before prices return to their peak values in the aforementioned areas.
The analysis suggests that current market conditions will continue to boost the confidence of active vendors and those considering placing their property on the market. Supply demand balance continues to work in their favour across many areas of the country. The current total volume of sales stock across the country is 12.4% less than in July last year. Moreover, sellers are being tougher on pricing as evidenced by a sharp fall in the number of price reductions, down 17% year on year.
The average time on market for England and Wales has fallen by four more days to 208. Additionally, the average time on market for unsold property appears to be defying the normal seasonal trends. At this time of year, median marketing times normally begin rising steadily. However, increasing market momentum has meant that eight of the 11 areas of the UK actually recorded further falls in this time on market metric. Even the North East, which currently suffers the longest marketing times, fell by 28 days.
A further monthly rise of 0.7% for home prices in the capital pulls Greater London further ahead of the rest of the country. Average prices have risen 7.6% in the last six months alone and they now stand 9.5% higher than in July 2012.
The report suggests that these prices are being fuelled by both investors and high demand to live in the region. The extremely low volume of sales property entering estate agents' portfolios makes it firmly a seller's market.
On top of this buyers' choice is severely restricted. A 22% shortfall in new stock compared to last year is making competition for good quality stock in the most sought after areas truly intense. In June 2007, potential buyers in Greater London could choose from three times more newly marketed properties than they could in June 2013.
Doug Shephard, Home.co.uk director, warned against too much optimism. ‘The reality is that whilst there are areas showing great improvement and even some showing signs of overheating such as Greater London, there are also several very poorly performing regional markets. The wider economy remains very fragile,’ he explained.
He pointed out that government stimulus and bank bailouts seem to have saved the UK property market but attention must now be turned to jobs and reducing government debt.
‘First time buyers are, and always have been, the life blood of the property market. Buy to let landlords may be filling the gap for the moment but, ultimately, this trend will lead to fewer next time buyers and much fewer transactions. Wannabe first time buyers need jobs and job security,’ he said.
‘The difficulties facing first time buyers are onerous. Mortgage lenders seemingly favour the buy to let sector and, owing to rising living costs, their ability to save a substantial deposit remains an enormous challenge. Very low interest rates for saving accounts and severe pressure on their disposable incomes place them in a very difficult situation,’ he added.
