With home prices rising and marketing times falling in every English region and in Wales, there is a certain spring in the step of the housing market. Pump-primed by the government Help to Buy initiative and ultra-low interest rates, overall the property market is heating up rapidly. The average home price in England and Wales has risen 7.9% over the last 12 months, and this figure looks set to go much higher as the supply of homes for sale remains tight.
However, regional variations are truly significant in the current market, and national average figures obscure a great diversity of fortune throughout the regional property markets. The runaway price rises seen in London are not to be found in the North of England or Wales. The North East, North West, Yorkshire regions and Wales are all still experiencing sub- inflation price growth of between 0.7 and 2.3%, although they are all faring much better than Scotland. North of the border, asking prices have fallen by 1.4% over the last year.
Home prices rose in all English regions and Wales over the last month, and this reflects both increasing confidence amongst vendors and greater activity in those markets. The biggest risers, aside from London, were East Anglia (+1.1%), the South East (+1.1%) and Yorkshire (+1.0%). All the English regions registered a drop in marketing times over the last month as is to be seasonally expected. Moreover, typical marketing times are also lower year-on-year in all the English regions, while Scotland and Wales have both seen an increase in the typical time on market over the last year. The most active English regions are the South East, East Anglia and the South West, with typical marketing times of 76, 92 and 116 days respectively.
The total number of properties on the market continues to fall overall. Regional variations are also evident on the supply side. The North East, North West and Yorkshire have all seen an increase in supply of sales properties entering the market over the last 12 months. In contrast, the hotter markets of London, the South East, the South West and East Anglia show year-on-year contractions in the number of properties being put up for sale of 13, 21, 11 and 17% respectively.
A further monthly rise of 3.1% is both astonishing and alarming. The phenomenal pace of price rises in the UK capital suggests that this property market will easily surpass our forecasted price growth of 20.2% in 2014. The average home in London rose by over £13,000 last month to attain a new all-time high of £438,118. Over the last year, the mix-adjusted average price of a home in London has risen by around £70,000.
The frothy London market has now fully confirmed its status: a speculative bubble. The typical time on market has plummeted to just 47 days, which is six days less than in February 2007. Tremendous demand and spiralling prices may tempt more potential vendors into the marketplace. Such an influx of sellers who see the opportunity to cash in will, in turn, help ease the severe shortage of supply.
Doug Shephard, Director at Home.co.uk commented:
"Overall, home prices will continue to rise swiftly while demand outpaces supply. Falling marketing times throughout the English regions indicate that more regions are witnessing greater optimism and activity as demand rises, and this can only be good for the slower markets in the North and Wales. However, increased supply in the northern regions will keep a lid on price rises this year.
London and the South portray a very different story, and this year will yield further record-breaking price rises as more money chases fewer properties. Our current projections indicate that London prices will rise a further 10% and the South East by 5% in just the next three months."