UK property prices up 0.5% in September, latest index shows

House prices in the UK grew by 0.5% in September, the highest monthly increase since May 2007 and 41% of markets registered price rises compared to 6% a year ago.

Improving market sentiment, rising demand, low mortgage rates and falling supply are combining to put continued upward pressure on house prices, according to the latest index report from Hometrack.
The firm said that house price growth is accelerating on the back of a growing coverage of markets registering price rises. But there are regional variations. Over 70% of markets in London and the South East are registering increases while in all other regions price rises are limited to less than a third of regional markets.

However, in many markets outside London this is the first time that prices have started to register positive growth for over five years. Hometrack says that prices are rising off a low base and talk of a housing bubble is overstated.
These latest figures mean that demand has increased for the eighth month in a row growing by 1.4% in September. Also, the supply of homes for sale fell by 0.3%, the first contraction in seven months. 

The data shows that there has been a steady contraction in the supply of homes for sale in London and the South East over the last three months. Across other regions improving market conditions has bought increased supply.

The strongest price rises are in regions where supply is most constrained and the report says that expanding supply is keeping price rises in check in the regions outside London and the South East.

The proportion of the asking price being achieved marginally increased to 94.7%. When this indicator plateaus and starts to decline the level of price growth will start to moderate, it explains.

‘A recovery in buyer confidence against a background of low volumes and scarcity of supply is supporting higher prices. It is important not to understate the impact of low mortgage rates and the buying power this provides to households that are looking to move,’ said Richard Donnell, director of research at Hometrack.

‘In the near term we expect prices to continue to rise but the market remains very sensitive to changes in demand and especially changing expectations over the outlook for mortgage rates,’ he added.