House prices rise again as supply squeeze continues

Mon 09 Dec 2013

In the three months to November prices rose 2.1 per cent, leaving them 7.7 per cent up on last year, according to the latest market data from Halifax.

Martin Ellis, housing economist for the bank, said that stronger demand coupled with an "insufficient increase in housing supply" were the main drivers behind the rise.

"Low interest rates, improvements in consumer confidence and official schemes, such as Funding for Lending and Help to Buy, all appear to have boosted demand," he added.

"However, continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices.

"We are also seeing signs of a revival in housebuilding, which should help bring supply and demand into better balance and curb upward pressure on prices over the medium and longer terms."

In November alone prices went up 1.1 per cent, the tenth successive monthly rise. Average prices though remain 12 per cent below the August 2007 peak.

Nicholas Ayre, managing director of homebuying agency Home Fusion, said: "The latest Halifax HPI shows a key theme. House prices continue to rise mainly due to supply constraints."

‘What is encouraging is the news of the £1bn in loans announced by the government to unblock large housing developments, which is to be targeted at major conurbations like Leeds and Manchester.

"Prices have started to rise in the regions outside of London, but they are playing catch up and not growing at anywhere near the rate of London. What this shows is that even if overseas buyers are not interested in investing in the regions, the government is."

Activity remains on an upward trend, with home sales increasing for the sixth successive month in October, now reaching 94,950. This is 24 per cent higher than in October 2012.

Source; Zoopla.

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