Fall in homes for sale boosts prices further

LONDON’S house prices jumped again in October, according to data out today from Hometrack, as supply of homes dropped but demand kept on rising.

Nationally prices increased by 0.5 per cent in the month, with London leading the way at 0.8 per cent.

That means that over the last 12 months London’s prices have risen by an average of seven per cent – accelerating from the 6.2 per cent rise in the 12 months to September.

The capital’s properties achieve 97.2 per cent of the asking price, on average, while nationally the percentage is 95.2, close to its all time high of 95.7 per cent seen in 2007.

Across England and Wales 36 per cent of areas saw price rises. In London, 75 per cent registered increases.

Demand for housing increased 6.4 per cent in the month in London, while the number of properties on the market stayed flat.

A chronic lack of supply is driving price growth. Improving confidence amongst buyers has been fuelled by low mortgage rates and positive news on a recovering housing market,” said Hometrack’s Richard Donnell.

“In the face of short supply, agents will continue to push asking prices ahead but the question is how much further buyers are willing to go to meet higher prices.”

Meanwhile Halifax’s house price sentiment indicator jumped sharply in the third quarter – 70 per cent of UK adults now expect prices to rise over the next year, with just six per cent expecting a fall.

That leaves a net balance of 64 pre cent expecting an increase, up strongly from the net balance of 40 per cent who expected an increase in the previous survey three months ago.

Renting forecasts also stayed high – 66 per cent expect rents to rise in the next year, with seven per cent predicting a drop in costs.