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April 2014 - Hometrack National House Price Survey

On 28 April, 2014
  • House prices increased 0.6% in April as regional housing markets picked up momentum in price growth. London continues to register above average growth (0.8%) driven by the lower value markets. There are signs of growing price resistance on the part of buyers in London which could check the rate of house price appreciation in the coming months.
  • The time to sell has increased from 2.7 to 3.4 weeks and there are declines in the proportion of areas registering higher prices compared to 2013H2. The time on the market has fallen to its lowest level since June 2007 at 6.3 weeks.
  • Nationally, demand for housing continues to increase, rising by 3.3%. New supply continues to grow at a slower rate than demand, rising by 1.9% over the month. This is sustaining an extended supply/demand imbalance that has been in place for the last six months.
  • Market conditions continue to strengthen in the regions outside London. 48% of postcodes registered higher prices in April - three times higher than the level a year ago and the highest for a decade (June 2004). The proportion of the asking price achieved has jumped to 96.7% the highest level since September 2002.
  • The impetus for house price growth looks set to continue to transition into the regional housing markets over 2014. What is less clear is the scale of pent-up demand that exists to sustain further house price increases with signs that the coverage of price rises outside London is starting to plateau. The outlook for the economy and interest rates and the willingness and ability of households to take on mortgage debt are the primary factors that will influence the outlook over the medium term.

Emerging signs of price resistance in London as house prices move higher in April

Commenting on the latest monthly national housing survey, Richard Donnell Director of Research at Hometrack - the residential property analysts - said:

“House prices increased by 0.6% in April, unchanged over the month. Demand (up 3.3%) continues to grow faster than supply (up 1.9%) maintaining the supply/demand imbalance that underpins the upward pressure on house prices. London continues to register above average growth (0.8%) but market conditions continue to strengthen in the regions outside London, particularly southern England.

Nationally, the average time on the market is down to 6.3 weeks, the lowest since June 2007. While the outlook is for further price increases there are emerging signs of growing price resistance in London which could check the rate of house price appreciation in the coming months.

April Summary
Source: Hometrack National Housing Market Survey

The continued improvement in market conditions across the wider housing market is demonstrated by prices increasing across 48% of postcodes outside London over April – this is the highest coverage of price rises for a decade (June 2004) and is three times higher than the level seen a year ago (16%) - Figure 1. The pick-up in the coverage of price rises is very clear cut after six years of falling then static prices although the extent of price rises is starting to plateau.

Download the PDF to view full results of the April survey.

% postcodes registering higher prices over the month
Time on the market (weeks)

Improving market sentiment and low mortgage rates are supporting increased activity. The time on the market indicator delivers a strong indication for the overall health of the market and this measure has declined below 10 weeks across all regions (figure 2). The greatest declines in the time to sell over the last year have been seen in East Anglia, South East and Wales. In the North and Yorkshire & Humber the decline has been less marked and price rises remain below average.

In London, the impetus for above average house price growth is originating from the lower value markets that offer relative value for money - South East London, for example, has an above average rate of growth (0.9%) and one of the lowest time on the market levels nationally at 1.9 weeks.

However, the latest survey reveals early signs of growing price resistance in the London market in the face of recent, rapid increases in residential values.

  1. The time on the market indicator is up from 2.7 to 3.4 weeks over the last month with sales taking longer to close.
  2. The proportion of markets registering price gains each month is starting to soften. Two thirds of London postcodes registered a price gain in April compared to an average of 76% over the final 6 months of 2013 – figure 1.
  3. The proportion of the asking price achieved declined from 99.3% to 99%, still a highly elevated level by historic standards.

While these changes are from levels that indicate very strong market conditions, they suggest that buyers are starting to become less willing to bid up the cost of housing at recent rates. Widespread media speculation over the sustainability of price increases in the London housing market is likely to be having an impact on sentiment. The supply of housing for sale in London is starting to rise off a low base– up 2.5% in April compared to 1.9% nationally. New supply at very full prices will only exacerbate the sensitivity of buyers to pricing levels in the market.

It is important to remember that London has seen a pick-up in house prices that has been running for the last 4 to 5 years, starting in the central London market. The regional markets have only started to register a sustained pick-up in activity and prices for the last 15 months with the turnaround starting in January 2013.

The impetus for house price growth looks set to continue to transition into the regional housing markets over 2014. What is less clear is the scale of pent-up demand that exists to sustain further house price increases with signs that the coverage of price rises outside London is starting to plateau. A continued improvement in the economic outlook and incomes growth is essential to sustain improved levels of market activity but the outlook for interest rates and the willingness and ability of households to take on mortgage debt are the factors that will influence the outlook over the medium term.

April 2014 - Hometrack National House Price Survey
Download the PDF

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