Asking prices up £10k in May driven by supply shortages
The Rightmove survey suggested this monthly and all-time 3.6 per cent price rise high was driven by lack of supply at a time of increasing market confidence.
Miles Shipside, Rightmove director and housing market analyst said: “May is a traditionally bullish price rise month, though this year’s 3.6 per cent jump beats the previous May high of 3.2 per cent set in 2002.
“A late Easter in the heart of the house-hunting season has not only concertinaed the traditional hottest home-moving period by several weeks, but also stagnated seller numbers, further stirring up prices in areas of buoyant demand.”
Asking prices in London continued to outpace the rest of the UK with a ‘frothy’ 16.3 per cent rise against 4.95 per cent elsewhere.
The average asking price in London is up by nearly £80,000 so far in 2014, an average of £4,405 per week. The weekly average of the rest of the country is £1,521. In the most extreme example, Tower Hamlets, close to the City, has risen 43.1 per cent so far this year driven by cash buyers.
However, the annual increase of 8.9 per cent cross the country is still below inflation at the height of the 2007 housing boom in October 2007.
Rightmove said the Mortgage Market Review (MMR) rule changes will help temper the market and surveyors are already reporting falling valuations across the UK in April. Remortgaging figures dropped particularly steeply, as lenders tighten criteria to let new systems bed in.
Shipside concluded: “The MMR is best used as a tool to bring higher standards to lending rather than a blunt instrument to tackle chronic shortages of housing supply in one of the ten regions of England and Wales.”
On the supply and demand imbalance, Jeremy Duncombe, director at Legal & General Mortgage Club said: “This imbalance means the Government has to walk a fine line between boosting the market in certain regions while stopping prices from racing too far ahead in others.
“While the Help to Buy scheme has drawn criticism from some quarters, the latest data shows that the majority of applications are coming from the north of England, suggesting it is being used to successfully target the areas that still need extra stimulus.”