Property asking prices continue to rise in most of the UK, latest index shows

Residential property asking prices in the UK are continuing to rise, up another 2% on last month and now 12% higher than a year ago, according to the latest sector index.

The prices in England and Wales are now up 5.5% on last year and the North East, North West and Scotland were the only parts of the UK not to record price rises in the last month.

The Asking Price Index from Home.co.uk also shows that the supply of property for sale across England and Wales is down 18% on last year.

On a monthly basis prices in England and Wales have risen 1%, the largest monthly rise since May 2011. London and the South East still continue to show strong growth and more areas of the UK are contributing to the recovery. 

Scotland is now the only area of the UK that is still recording house price deflation, down 1.4% over the last 12 months.

The index  report says that the imbalance between demand and supply continues to dominate the market dynamic. The supply of fresh property stock across England and Wales has contracted by a further 18%, and in London new stock is down by 31% compared to last year.

Growing demand from buyers chasing ever fewer properties has driven down the typical time on market by an average of 8% over the last 12 months.

However, the recent price rises being recorded across the majority of the UK still conceal the bipolar nature of the market. Over the last five years, prices across England and Wales have risen 3.4%, whereas four out of nine English regions, plus Scotland and Wales, have shown price falls over the same time period.

Annual price growth is largely driven by London with a rise of 11.7% with prices in the South East up7%. The South West is vying to become another high performance region, with price rises of 4.6% over the last 12 months. Annual house price rises of 4% in the East Midlands and 3.5% in the West Midlands means that capital invested in those regions is now keeping up with inflation.

A growing concern is that regional house price bubbles are beginning to emerge where demand for housing continues to far outstrip supply. A lack of attractive non-property investment opportunities coupled with the widely reported surge in home prices is making potential vendors hold back, the report suggests.

As a consequence, the flow of new property stock across England and Wales is down 18% on this time last year. Three of the nine English regions are recording even tighter supply figures. Sales stock entering the market is now down 21% in the East and South East, and may well approach the 31% drop seen in Greater London. The flow of new supply in Wales and Yorkshire is relatively strong, with only a 5% fall in stock. Subsequently, average prices in these regions are being kept in check, with rises of 1.5% and 0.6% respectively over the last 12 months. 

According to Doug Shephard, the firm's director, London's property investment bubble continues to expand at an alarming rate. He describes the 2% jump in average prices in the last month alone as 'simply astonishing', and pointed out that the increasingly severe shortage of new stock is fuelling the accelerating rate of growth.

The average price of a house in London has broken through the Ј400,000 barrier for the first time and is 15.3% higher than five years ago. The growth is not showing any signs of slowing down and even the South East, with annual price growth of 7%, doesn't come close the capital's performance. Currently, only 60% of the properties for sale within a 10 mile radius of the centre of London are priced below the Help to Buy scheme threshold of Ј600,000.

'House price growth is now sweeping north and west from the capital. Welcome news for home owners, but troubling for potential buyers whose salaries are not increasing anywhere near as fast,' said Shephard.

'Price rises in London and its surrounding regions have now established a solid two year trend, and one may well conclude that these property markets have fully recovered. However, a true recovery cannot be complete without considerable improvement in the underlying economy, which is currently looking like a one horse race. Until real wage growth matches house price inflation, housing affordability will become increasingly difficult and a distant dream for many,' he explained. propertywire