House prices hit boom levels as first-time buyers flood in
Almost a third of postcodes saw rising house prices in June – the highest amount since the peak of the housing boom in September 2007, according to figures published today.
The Hometrack Housing Survey also reveals that average prices climbed 0.4 per cent in June, matching the growth recorded in May, which had been the highest monthly increase since June 2007. Prices rose across 31 per cent of postcodes and fell in just 3.1 per cent, the lowest level for three years.
The news comes amid concerns that the Chancellor George Osborne's vast Help to Buy programme of equity loans and mortgage guarantees could fuel a new bubble. It echoes figures produced by the building society Nationwide showing that June's house price inflation increased at its fastest pace since September 2010.
Prices are being pushed higher by an ongoing shortage of housing for sale, continued growth in demand and improving market sentiment, according to Hometrack.
Two factors are behind the shortage in supply, said Richard Donnell, director of research at Hometrack. "First is an increase in the number of first-time buyers, who increase demand but add nothing to available supply," he said.
"Second, existing occupiers are looking to identify property they want to buy before putting their homes on the market, which boosts demand ahead of any growth in supply."
The survey showed that the capital is still leading the way when it comes to rising property prices. London registered the strongest growth in June, with prices rising by 0.9 per cent for the second month in a row.
But Hometrack's figures reveal that improved market activity and price rises are spreading beyond London. Prices grew in six out of 10 regions, with East Anglia registered a 0.4 per cent increase while prices in the South-east grew 0.3 per cent.
The north-south divide is still evident in the average time taken to sell a property. In London this is just 4.1 weeks, compared with more than 10 weeks in the Midlands and northern regions.
Jonathan Hopper, managing director of the property search consultancy Garrington, said: "The London property market is an extraordinary microcosm. It has effectively broken free of the rest of the UK and is operating in its own stratosphere."
Mr Donnell added that prices would continue to rise, although growth may be hampered by too-high price expectations from sellers.
"An expansion in supply to ease the pressure on prices looks unlikely, and the short-term direction for the market depends on demand and expectations over the outlook for the market and wider economy," he said.
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