Residential Property Prices Continue To Increase
UK residential property prices have increased by 0.4% in May 2013, the biggest monthly increase since May 2007, as, according to Hometrack Ltd, a shortage of available residential properties boosted average property values in London.
Average residential property prices in England and Wales have seen a gradual increase in value during the last six months with property prices increasing gradually, while London property prices have jumped 0.9% over the same timeframe.
Demand for residential property in the capital has surged 15% in the past six months alone, while supply of available properties has fallen 0.6%.
Richard Donnell, Director of Research at Hometrack said, “The impetus for rising house prices is originating almost exclusively from London and the South East. Elsewhere housing market conditions are improving gradually, with prices trending slowly upwards.”
The Government initiative to ease the strict lending conditions set by lenders has improved the overall health of the UK property market but the Funding for Lending scheme needs to be backed by more solid initiatives.
The Government’s Help to Buy scheme has already drawn criticism from the International Monetary Fund (IMF) who state that there must be measures to boost the supply of housing. The IMF said last week; “There is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house-price increases that would work against the aim of boosting access to housing.”
Even Mervyn King, the former Governor of the Bank of England (BoE) said it “shouldn’t become a permanent feature of our financial landscape.”
The Hometrack report showed that nationally demand for residential property increased at a slower pace during May 2013,
- New-buyer registrations up 2.5%, compared with 3.1% in April 2013.
- The supply of housing for sale increased 2.8%.
The supply of available residential properties in London rose 3.5%, although that was outweighed by a 5.6% increase in new residential property buyers.
- 6 out of 10 regions assessed by Hometrack showed residential property price increases in May 2013 compared with the previous month.
- Four regions were unchanged.
- Outside of London the area with the largest residential property price increase was the South East with a 0.5% gain.
While growth in residential property buyer numbers continues to follow a similar pattern observed in recent years, it is a lack of available residential property for sale that has become the primary driver of UK property prices.
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