House prices set to rise further after jumping 4.4% in 2013

Broader based recovery in housing market dependent on ‘real’ economic growth

Resurgent demand and a falling supply of new homes helped to push house prices up by 4.4 per cent in the last year, reversing the fall of 0.3 per cent seen in 2012, property analysts Hometrack reported today.

“Demand grew at the fastest rate for three years while the supply of homes for sale grew at the lowest level recorded over the 12 year history of the survey, “ said Richard Donnell diretcor of research at Hometrack.

“Scarcity of supply was the result of higher sales volumes eroding the stock of homes for sale. The launch of Help to Buy was a clear sign of Government support for the housing market which encouraged a sustained increase in buyer numbers, especially over the second half of the year.

“Record low mortgage rates also played an important role in higher prices over 2013.”

Demand for housing grew by 25 per cent in the last year while the supply of homes for sale rose by just 6 per cent.

However, Hometrack’s data for December, gathered from estate agents, showed the first fall in demand and in new sales for 11 months.

Mr Donnell said this refelected a normal seasonal slowdown in housing market activity and pointed out that prices had still risen by 0.5 per cent in December, making it the fourth month in a row to show growth.

London and the South East continued to drive the housing market with annual price rises of 9.1 per cent and 5.0 per cent respectively.

Only the North saw a fall in prices – down 0.5 per cent – but Yorkshire and Humberside, at 0.4 per cent and the North West at 0.5 per cent saw growth well below the national average.

This trend is set to continue. Mr Donnell said: “Overall we expect the momentum in house price growth to spill over into 2014 supported by a continued lack of supply and rising demand.

“The strongest market conditions and impetus for price inflation is set to remain focused on southern England in 2014. A broader based  recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes.”

London has been the driving force for house price rises for the last three years. Hometrack said that the percentage of homes fetching their asking price in the capital is at its highest level since it started its survey in 2001.

Mr Donnell said that Chancellor George Osborne’s introduction of capital gains tax on overseas home owners and the growing noise about a possible mansion tax in the run-up to the 2015 election could dampen demand for the most desirable parts of central London.

He added: “Domestic demand, powered by low mortgage rates, is likely to drive the market ahead in 2014, although lower yields means investors are becoming more reliant on capital gains to boost returns and this increases the sensitivity of this group to higher mortgage rates.

“Any slowdown in London will impact sentiment across the wider housing market as well as the overall rate of growth.”

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders