Boost to housing sector continues

Updated: 

housing market

Britain's resurgent property sector is enjoying its best market conditions for six years as the housing revival gathers pace, according to a report.

Property analyst Hometrack said a further 0.4% hike in house prices between July and August, together with marked improvements across all key indicators, means the sector is now in its best shape since before the financial crisis.


The market shrugged off the traditional August downturn as house prices grew at an annual pace of 1.8%, marking their biggest year-on-year rise for more than three years.

The figures come amid speculation the UK may be heading for another property boom.
Nationwide building society last week reported a 3.5% year-on-year hike in prices in August, while Bank of England data showed mortgage approvals for house purchases hit their highest level since the financial crisis.

Hometrack said there has been an "unseasonal increase in demand" over the past two months, with d emand for housing growing by 1.1% in August, following a 1.1% increase in July.

July and August typically see a decline in the number of homebuyers over the summer holiday season.

It added that properties are also selling faster, spending 8.1 weeks on the market - the lowest since November 2007 - while far fewer sellers are taking a discount on their sale price.

At 5.4%, t he discount to asking prices is the lowest since September 2007.

Richard Donnell, director of research at Hometrack, said: "All the key market indicators such as time on market and the proportion of the asking price achieved show underlying housing market conditions are at levels not seen for six years."

The buoyant conditions - spurred on by G overnment measures such as Funding for Lending and Help to Buy - prompted Bank of England governor Mark Carney to warn over the risks of another housing bubble last week.

He said the Bank was "acutely aware" of the potential threats and said action will be taken to clamp down on mortgage lending if needed.

Hometrack's data showed a shortfall in supply versus demand. London and the South East saw the strongest market conditions, with prices up 0.9% and 0.5% respectively.

But overall prices grew across a third of the country in August in what marks the greatest coverage of price rises since May 2007.

Improving market conditions and firmer pricing in the Midlands and northern regions have brought more sellers into the market, it added.

Prices edged 0.1% lower in the North East and remained static across Yorkshire and Humberside and the East Midlands, but rose 0.1% in the North West, Wales and West Midlands.

Values rose 0.2% in East Anglia and the South West.

While overall demand rose by 1.1% in August across the UK, supply grew by just 0.8%, pointing to further price hikes to come.

Hometrack said: "Overall we expect demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rates remains unchanged.

"A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term."

© 2013 Press Association

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