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Latest data (April) from property website, Rightmove, shows average asking prices rising by 3.6% (£8,307), the largest monthly rise for 5 years.
Whilst an increase is to be expected with the onset of the Easter home moving season, a unique combination of factors have helped push average prices to a new record high, says Rightmove. As a result, the annual rate has increased to 15% from 12.2%, back to the level of September 2004, with the average asking price for a property now standing at £236,490. Or £30,816 higher than a year ago.
Miles Shipside, commercial Director of Rightmove says that we have a unique set of market conditions at present, and followers of housing fortunes should not regard this as the start of another national boom.
As prices go higher, fewer buyers can afford to get on the ladder or trade up, and that will restrain ongoing increases in many parts of the country. But more affluent areas will remain the exception however.
The UK property market has traditionally followed a boom and bust model in the last 30 years, with the downturns as a result of economic hardship and resultant forced sales. Without those factors on the horizon, the market is having far more difficulty finding the balance of sustainable pricing and volumes of sales. Indeed, some strong regional pent up demand is being fuelled by greater affluence and availability of mortgage finance. When combined with a shortage of supply, especially in the south, the 'soft landing' price slowdown scenario has failed to materialise for many aspiring home owners.
Against this background, there is also the impending introduction of mandatory Home Information Packs on all property put onto the market after June 1st. Many estate agents, starved of stock for months, may see this as a one off opportunity to grab market share from their competitors. Some are advertising to persuade sellers who were thinking of marketing their properties later in 2007 to rush to the market before June in order to avoid incurring the costs of Home Information Packs. This should later reduce upwards price pressure in areas of oversupply as more properties compete to find buyers. However, this is unlikely to occur in the limited time left before the end of this unique scenario for estate agents - a mere six weeks away.
Meanwhile, latest Government (DCLG) figures show house prices falling by 0.2% in February. But economic analysts, Capital Economics, point out that this latest data will raise fears that the housing market is gathering fresh strength.
Part of the reason for this is that the Government's index is not seasonally adjusted and that house price falls in February are normal. More importantly, this year's drop was much smaller than the 1.2% fall seen in February 2006, yet the annual rate of house price inflation rose to 12.1%, its fastest rate since March 2005.
16 April 2007 © Moneyextra.com
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