House prices grew by 0.4% in May, the highest increase in a single month since May 2007 (0.6%), according to Hometrack.
It said the prices continue to be driven by London and the South East where they grew at 0.9% and 0.5% respectively. Prices across the rest of the country averaged a 0.1% rise.
Hometrack said that while the growth in buyer numbers is following a similar pattern to recent years, it is a lack of housing for sale that is acting as the primary driver of price rises.
The number of sales agreed is outstripping the number of new properties coming to the market. Nationally, new supply grew by 2.8% in May while sales agreed were up 8.2%. The gap between supply and demand in London is the largest it has been since spring 2009. In the last six months demand has grown 15% while supply has declined by 0.6%.
Across the rest of the country the trend in prices is upwards with demand rising ahead of supply – albeit at
a lesser extent than in London and the South East. Prices were static in four regions (North
East, North West, Wales and Yorkshire & Humberside) and grew in a further four (East Anglia, East
Midlands, South West and West Midlands).
The average time on the market has fallen back to 8.8 weeks – the lowest level since July 2010. The
sharpest falls in time on the market have been seen in Southern England at 7.2 weeks compared to
around 11 weeks in the Midlands and Northern regions.
The percentage of asking price achieved stands at just under 94%, the highest level since July 2010.
Richard Donnell, director of research at Hometrack, said: “Talk of improving market conditions is likely to result in more marginal sellers entering the market in the coming months. The danger is that the pressure to secure instructions will lead to properties being put on the market at unrealistically high prices. This in turn will result in fewer sales and a period of price re-alignment.
“What we are seeing is the continuation of a series of small ‘mini housing cycles’ which have been in evidence
over recent years.
“The improvement in market conditions is shown by a decline in the average time on the market to 8.8 weeks –
the lowest level since July 2010. The sharpest falls in time on the market have been seen in Southern
England while the time on the market remains around 11 weeks in the Midlands and Northern regions. The
percentage of the asking price being achieved has risen to just under 94%, the highest level since July 2010.”