Property prices rise at fastest rate since 2007
Low rates and improving economic outlook mean demand continues to outpace supply
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Monday 02 September 2013
Britain’s housing market is at its strongest for six years, with an accelerating recovery blowing away the traditional August slowdown.
The authoritative Hometrack monthly survey has found prices have risen 0.4 per cent in August against 0.3 per cent in July – with the South East showing signs of a possible bubble.
London prices have surged 0.9 per cent in the last month, with the South East climbing 0.5 per cent. And the trend is poised to continue with a 1.1 per cent increase in demand outpacing a 0.8 per cent rise in supply. Sellers are now achieving 94.6 per cent of their asking price, and the average sale time has fallen to just two months.
The mismatch between supply and demand is much more marked in the traditional hotspots of London and the South East. In total a third of the country’s post codes saw rises in price, the highest level recorded since May 2007. Hometrack expects this to accelerate, further stoking price rises, thanks to the release of “six years of pent-up demand”, created after the market was thrown into reverse by the financial crisis.
The research says low mortgage rates and an improving economic outlook are the drivers for the recovery.
The trend of rising prices could yet cause concern for new Bank of England Governor Mark Carney, whose monetary policy committee holds its monthly interest rate-setting meeting on Wednesday.
Mr Carney has vowed to hold rates for three years at their current historically low levels, unless there is a sharp spike in infla-tion.
However, some City analysts reckon the Bank could be forced to move sooner as signs of economic recovery appear to be increasing.
An influential group of economists linked to the Institute of Economic Affairs yesterday attacked Mr Carney’s “misguided forward guidance” policy, telling the Sunday Times it would delay necessary rate rises and was a “flawed model” that risks “accelerating inflation or worsening boom-bust cycles”.
Hometrack said: “The balance of supply and demand recorded by the survey leads house prices by three months and is an indicator of future changes.
“Overall we expect demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rate remain unchanged. A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term.”
Hometrack’s figures follow on from data from the Bank of England last week showing mortgage approvals for house purchases had jumped to 60,624 in July from 58,238. While that is low when compared to the 90,000 a month typically seen prior to the financial crisis, approvals are at the highest level seen since then.
- 2 Porn block in India: hundreds of sexual websites banned, internet outraged
- 4 Dutch King Willem-Alexander declares the end of the welfare state
- 5 Gamers confess the worst things they've done in The Sims
Jackie Chan in second place in Forbes' Highest Paid Actors list after magazine includes actors working outside US movie industry
Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
Natalia Molchanova: World's most successful free-diver missing and feared dead after disappearing in Mediterranean
Dutch King Willem-Alexander declares the end of the welfare state
Pizza Express protests: these restaurants charge staff for tips paid by card
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Jeremy Corbyn: Tony Blair could face war crimes trial over 'illegal Iraq invasion'
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
£20000 - £23000 per annum: Recruitment Genius: An excellent opportunity has ar...
£40000 per annum: Recruitment Genius: This is a fantastic opportunity working ...
£33000 per annum: Recruitment Genius: The prime focus of the role is to assist...
£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Trainee Recruitment C...