The average house price now stands at £233,061, a new record level for England & Wales, exceeding the previous peak reached in February 2008 at the height of the last housing boom.
David Brown, commercial director of LSL Property Services, said: “House prices rose in May to the highest on record.
“Even taking inflation into account, the record high price is symbolic of the significant improvement in the housing market over the past year.
“Prices are £6,125 higher than in May last year, sales are up 19%, and prices have only dropped one month out of the past eighteen.”
The report said the catalyst for has been significant improvement in mortgage availability.
Brown said: “Life for first time buyers is noticeably easier than it was six months ago. An abundance of great mortgage deals are on offer and lenders are more willing to lend to high loan to value borrowers, which has led to a substantial rise in first-time buyer activity.
“Schemes like Help to Buy and Funding for Lending have acted like a steroid injection for the mortgage market and made it markedly stronger than last year.”
But the report warned that not all is a good as appears as once London is taken out of the equation the average price falls dramatically.
Brown added “The red hot London market is giving the whole property market a deceptively healthy glow.
“London still leads the way in terms of house price rises with growth in 31 out of 33 London boroughs annually and is the only region in England with average prices above previous record levels.
“The North/South divide is actually becoming more prominent as time goes on and as the London market is more exposed to a wider audience of potential foreign buyers, flocking to the capital.
“A strong economy is vital for the health of the property market and it is performing much better in London than other less resilient parts of the UK, which are suffering from public expenditure cuts.
“More needs to be achieved to help banks lend to new buyers, as a strong improvement in first-time buyer lending is the crucial catalyst for a full market recovery.”
The report also found that mortgage finance is still constrained despite improvements over the past year.
Brown concluded: “Many buyers remain locked out of the market because they can’t afford to meet strict mortgage requirements and save enough for a deposit which is why cash buyers still account for a high proportion of the total number of sales.
“Lender’s caution will not disappear, as new regulations and controls continue to hamper their ability to lend.
“The only real solution is a sustained improvement in the wider economy which will help increase the supply of mortgage finance and improve demand for it.”
