House prices are still climbing at a time when the market usually slows, according to the latest monthly survey from Hometrack. Figures show that house prices grew by 0.6% over June and agreed sales increased by over 8%. London continues to be the main impetus behind this growth with average prices in the capital rising by 1.1% in June. Further away from the capital, growth is more subdued, although Hometrack?s figures prove that prices are picking up.
London?s market prowess is, according to Hometrack, due to demand far surpassing supply. ?The major imbalance between supply and demand in London has caused prices to rise by almost 6% whilst growth in 4 regions has been less than 1%,’ says Richard Donnell, Director of Research at Hometrack. ?The differentials in growth reflect the fact that the London housing market significantly under-performed the rest of the market between 2001 and mid 2005. Pricing levels across most other regions, where house price growth was high over 2002 ? 2005, remain very full and this has been a major constraint on the potential for growth in recent months.?
In Hometrack’s survey of 2200 postcode areas, house prices moved higher across 42% of the country, falling in just 2% of areas and remaining static across 56%. Houses are selling faster than before – 6.5 weeks compared to 7.4 weeks a year ago. Meanwhile the average number of viewings per sale has also decreased to 10.9 from 13.2 a year ago.
Hometrack attributes buyer confidence in the early months of the year to media reports of a buoyant housing market: ?The continued growth in prices and rising sales levels suggest continued buyer confidence over the prospects for the market? said Mr Donnell.
However he is at pains to point out the fragility of this confidence in an environment of high house prices and stretched affordability levels. ?Whilst there is clear momentum in the market we believe that a modest cooling in the rate of growth is likely over the second half of the year,? he concluded.
