The Hometrack May survey of the housing market reveals a 0.6% increase in average national house prices, bringing the total increase this year to 3.2%. Transactions are also continuing to increase with house sales up 2.7%, buyers up 2% and discounts on asking prices diminishing.
Cumbria yet again heads the price rise league table of counties, with average prices rising by 1.5% in May. Cumbria has been consistently among the top performing counties for several months. Other high risers are Lancashire (1.3%), South Lincolnshire (1.3%) and Northumberland (1.1%). Cornwall is the highest rising southern county with house price rises of 1% in May. No counties experienced house price falls this month. The counties with the lowest house price rises are County Durham and East Riding of Yorkshire which each saw increases of 0.1%.
City hotspots this month included Carlisle (up 2.2%), Swindon (2.2%), Croydon (1.7%) and Preston (1.7%) (see table 6 in notes to editors). London’s price rise of 0.7% lifted the capital’s average house price to above £250,000 for the first time. The previous high of £149,600 was recorded in October 2002.
Hometrack’s unique National Demand Index™ shows that while both the number of properties for sale and the number of buyers registered rose this month, there continues to be significant excess demand. This implies further house price rises are to be expected over the coming months.
Average sales price achieved as a percentage of asking price is 96.4%. While this is the same as last month, it is the highest percentage recorded since November 2002. This again points to further upward pressure on house prices for the rest of the year.
The average length of time taken to sell a property has fallen to 4.0 weeks (4.2 in April’s survey). There is currently an average of 10.1 viewings before a sale is achieved.
John Wriglesworth, Hometrack’s Housing Economist, comments: “House price rises continue unabated and there are no signs of a slowdown. With little prospect of interest rates rising significantly this year, and with lenders continuing to aggressively push special mortgage offers, house buyers are still finding the means to afford more and more expensive properties.
“While we predict house prices to rise by 8% this year we are now expecting house price inflation to slow down to 4% in 2005. While the current housing boom will come to an end, we see no prospects of a housing market crash. The only economic factors that could precipitate a housing market crash are a doubling of interest rates, stamp duty or unemployment. None of these are expected by any UK economists either this year or next.”
