Overall house prices grew across a third of the country in August, the highest coverage of price growth since May 2007 and rising demand and sales agreed means that the recent momentum in house price growth has been maintained.
Over each of the last three years demand has fallen during the month of August but 2013 has been different, however, supply remains constrained, growing by just 0.8% over the month.
Over the last three months much of the growth in supply has been located in the regions outside London and the South East and the report says that improving market conditions and firmer pricing levels in the Midlands and Northern regions are bringing more sellers into the market.
Average house prices grew by 0.4% over the month, following a 0.3% increase in July and the strongest market conditions are London and the South East where there is the greatest mis-match between supply and demand.
Prices in London and the South East grew at an above average rate of 0.9% and 0.5% respectively. Across other regions the overall trend in demand is upwards but supply is also rising and keeping price rises in check.
The net balance of supply and demand is a lead indicator of house price growth and the current balance points to continued house price increases in the months ahead.
The report also shows that the gap between asking and achieved prices has been falling across the country. The gap is narrowing most rapidly in London and Southern England and improvements in underlying pricing levels are now feeding through in the northern and midlands regions.
The time to sell at 8.1 weeks is the lowest since November 2007. London and the South East have the shortest sales periods which have been declining sharply in recent months. Sales times have shortened in the Midlands and Northern regions but remain extended.
‘The recent momentum in house price growth has been maintained over August with continued growth in demand and sales agreed. All the key market indicators such as time on market and the proportion of the asking price achieved show underlying housing market conditions are at levels not seen for six years,’ said Richard Donnell, director of research at Hometrack.
A steady return of pent up demand after six years of suppressed housing market activity also explains some of the continued expansion in demand. While demand is rising, the supply of housing for sale remains constrained which is generating the upward pressure on house prices.
Overall there has been above average price appreciation with house prices up 0.9% in London and 0.5% in the South East over August. Across all other regions price changes throughout August were below average, varying from a fall of 0.1% in the North East to an increase of 0.2% in East Anglia and the South West.
Donnell said that the firm expects demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rates remains unchanged. A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term.
