House price growth has hit a two-year high of 1.8% as confidence returns to the market – up from -0.3% a year ago.
Prices have been rising over and above normal seasonal levels in all regions and momentum is increasing, according to Home.co.uk’s March Asking Price Index.
London prices have recovered from the severe price correction over the past few years and now look set for major growth.
However the figures do not reflect any potential impact on confidence from the Coronavirus.
The study reveals that low stock levels and low supply remain key drivers in both the sales and rental markets.
The total number of properties for sale in England and Wales is now down 11% year on year, but London is still the worst hit with 19% less property on the market than a year ago.
Rental stock down
The supply issue has also hit the private renting sector, where the market has 18% less stock than a year ago and there are 17% less new rentals coming on to the market.
London is suffering the most, with the supply of newly available rental properties down 23%, with the squeeze having a dramatic effect on rents.
The average rent in the Greater London area is now up 11% year on year and some boroughs are seeing annual hikes as high as 20%.
The Home.co.ukreport says all evidence points to the fact that supply has slumped below demand in both sectors.
This situation has clear implications for significant upward price adjustments, particularly in the London rental market where there have been dramatic rent hikes, especially in the central boroughs.
Other highlights of the report include:
Scotland and Wales top table
- Scotland and Wales top the regional growth table with month-on-month price hikes of 1.7% and 1.5% respectively, followed by the North West and South West (both showing increases of 1.4%).
- Supply of new sales instructions remains very low across the UK (down 2% year on year) and this, combined with already low stock levels in much of the UK, is pushing up prices.
- The largest falls in the number of new instructions year-on-year are in Scotland, the North West and the South West.
- The total sales stock continues to slide across England and Wales; down by 10.9% year on year.
- Scarcity is an even more painful problem for home seekers in the rental sector. The supply of newly available rental property across the UK is down a massive 17% year on year.
- Competition for the dwindling number of available properties to let has driven up the mix-adjusted UK average rent by 8.2% in just 12 months.
- The North-West and Wales are currently the UK’s best-performing regions, both with an annualised rise of 4.3%.
- The East of England remains the UK’s worst-performing region but this month’s leap of 0.7% indicates confidence is returning rapidly. The average asking price for the region is now a mere 0.7% lower than 12 months ago.