South 'driving house price rises'

Updated: 
Sale boardsHouse prices have risen for the second month in a row, but the whole of the increase has been driven by London and the South, a study found.

Prices increased by 0.1% on average across England and Wales in April, but they were either static or fell in the North, the Midlands and Wales, property analyst Hometrack said.

The general rises are expected to "flatten out" in coming months as worries over the economy impact on buyers' confidence, with official figures showing last week that the UK is in a double-dip recession.

The recent price rises have been due to strong demand from buyers, Hometrack said, with buyer registrations having increased by 25% over the last three months amid the traditional spring boost to the market.

But this demand has already started to weaken as a stamp duty concession for first-time buyers ended last month, with new buyer registrations growing at a more subdued rate of 2.1% in April, less than half of the 4.4% increase recorded in March.

Richard Donnell, director of research at Hometrack, said: "Conflicting reports over the strength of the economy and renewed fears over the prospects for the eurozone could over the coming months impact on buyer confidence. As a result we expect price rises to flatten out as we move into the summer."

London, which has had strong demand from overseas buyers, has been key in keeping average prices up by recording relatively healthy increases, while the rest of the market remains patchy.

The English capital saw the strongest monthly price rise with a 0.3% hike, with 0.1% increases also recorded in East Anglia, the South East and the South West. But prices were flat in the Midlands, fell by 0.1% in Yorkshire and Humberside and Wales and dropped by 0.2% in the North East and North West.

The length of time homes are spending up for sale, which is seen as a strong indication of the strength of the market, is less than six weeks in London but around 12 weeks across all regions outside the South.

More homes are also being put on the market by sellers who have been encouraged by the recent improvements in the market, with supply growing by 4.8% in April. But the study said if this trend continues it could also have a negative impact on house prices, with supply growing more strongly than demand.

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