Average residential values grew by 0.4 per cent over October and are now 4.9 per cent higher than a year ago.
Richard Donnell, Hometrack’s director of research, commented: “The strong growth in house prices across London and the South East continues to put a major gloss on the apparent strength of the national housing market. Our latest survey shows that average prices rose across just a quarter of the country. The reality for many home owners is that house price growth across large swathes of the country has been extremely modest over the last 12 months.”
The growth in London house prices continues to be driven by a lack of housing for sale and robust levels of demand. However, after what has been a year long bounce-back for the London market there are now growing signs of resistance to higher prices with the average time taken to sell property unchanged over the last three months (3.6 weeks) and price rises slowing for the fourth month in a row.
The number of properties coming onto the market in London has risen for the first time in five months as buyers look to take advantage of the current strength of the market. Whether sellers’ expectations on achievable prices are realistic remains to be seen. “A flood of potentially over-priced properties coming to the market would certainly put an end to the recent level of price rises,” said Donnell.
Away from the South East of England, house price growth remains limited with buyers remaining cautious and decent levels of housing available for sale. Donnell added: “Pricing levels are going through a prolonged period of re-adjustment in the wake of strong growth which took place between 2000 and 2004. Judging by how long it took the London market to adjust between 2001 and 2005 this is a trend that may well last well into 2007.
“House prices look likely to end the year up by around 5 per cent with average growth in London likely to be closer to 12 per cent. However, there are clear signs that the momentum in the London market is starting to slow and this is likely to continue in the run up to the new year.”
