House prices have risen by 0.6% in April according to the latest survey from Hometrack, the housing information and data company. This is the highest monthly rise for almost 2 years driven by values rising across 36% of the country, primarily in London and the South East. House prices remained unchanged across 60% of the country over April and there are some early signs that levels of market activity may start to slow in the run up to the summer. The national average house price now stands at £163,500.
"These results show a clear and ongoing north-south divide in the performance of the housing market" comments Richard Donnell, Director of Research. London continues to be the engine for national house price growth with values in the capital moving 1.2% higher over the month and by over 3% over the last quarter. In contrast, growth in the regions away from the south of England has totalled less than 0.5% over the last three months" he adds.
The strong performance by London is down to an on-going mismatch between the number of homes coming to the market for sale and the growth in demand. The Hometrack index shows the supply of homes for sale has grown by 14% over the last quarter, whilst demand has grown in excess of 50%. Furthermore, the growth that started in the prime areas of London is showing signs of spreading out across the rest of the capital. In most other regions, the differentials between supply and demand are less stark and price growth has been far more modest.
Other indicators from the Hometrack survey highlight the on-going north-south divide. The average time to sell a property has fallen rapidly in London to 4.2 weeks whilst this remains relatively high in the East Midlands (8.9), the North West (8.7) and Wales (8.4). The same is true for the proportion of the asking price achieved where in London this indicator has moved over 95% whilst there are some regions where this is still around 93%.
Commenting on the latest results Richard Donnell concludes "Whilst house prices have moved higher over April there has been a slowdown in the proportion of postcodes registering price rises. Given the affordability pressures across the market and limited impetus for house price growth in the regions away from London we expect levels of market activity and growth to slow in the run up to the summer and the World Cup. The outlook for house price growth over 2006 is really dependant upon whether recent levels of house price growth in the London market can be sustained. In the short term prices in London are likely to be supported by an ongoing shortage of housing for sale. However, the current level of growth is unsustainable over the longer term as house prices in the capital still remain relatively high. Away from the capital we are likely to see only modest levels of growth over the rest of the year."
