News: Buyers swell their ranks and drive prices to new highs

Fri, 10 Jul 15

UK buyers sprang back into action in June, according to new figures, but the demand continued to push prices to a new high.

Sales soared 15 per cent month-on-month, according to the new LSL/Acadata house price index. While price growth continues to cool, the shortfall of supply in the face of demand has pushed the average house price in England and Wales to a new high of £278,849.

Adrian Gill, director of Reeds Rains and Your Move estate agents, comments: "Whilst the vibrancy of house price growth across England and Wales has faded in the past year – with annual rises more than halving – the market still has colour in its cheeks."

On a monthly basis, property values climbed 0.3 per cent, or £966, while annual growth slows to 4.1 per cent, the smallest yearly rise since August 2013. Nonetheless, this is the fifth time already in 2015 that house prices have hit a new high.

"In cash terms it adds up to home values being £10,980 higher than a year ago," comments Gill.

"It’s clear the General Election distorted the usual tide of the market, with many buyers waiting until afterwards to complete on their purchases. In the first half of 2015, sales are 13 per cent lower than the same period last year. But June’s sharp upward spike shows the start of this calibration back to firmer territory, as confidence in the political landscape solidifies with a majority government."

The figures follow the latest RICS survey, which found that house price accelerated in June to an 11-month high. While the two reports differ on the pace of house price growth, however, they both highlight the imbalance between supply and demand.

Indeed, the average stock of homes per surveyor fell to a record low (the RICS data series began in 1978), while demand edged upwards for the second successive month.

One reason for the slight recovery in buyer enquiries is likely to have been a further drop in mortgage rates which is accompanying the ongoing strength of the labour market, notes the RICS report.

Both also predict prices to keep on climbing: 41 per cent more surveyors expect values to rise over the next three months, which is the highest proportion since April 2014.

"With borrowing cheaper than ever, wages recovering, and government schemes and incentives to lean on, buyers’ purchasing power is stronger than it has been for a long while," adds Gill. "As a result of this positivity, higher demand should place some upward pressure on prices in coming months, and keep the momentum of the market moving forward."

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