Unseasonably strong growth in housing sales over November and falling levels of supply have resulted in an acceleration in the rate of house price growth according to the latest monthly housing market survey by Hometrack, the housing information business. House prices grew on average by 0.6 per cent over November, up from October’s 0.4 per cent figure. The annual rate of growth is now 5.3 per cent, the highest since August 2004.
Richard Donnell, Hometrack’s director of research, says, ‘Buyers may have shrugged off the August interest rate rise, but the prospect of a further increase in November seems to have forced those who were thinking of moving to actually do so. The result has been a sustained increase in market activity over the last two months. But set against a background of dwindling supply, house prices have continued to rise, a trend that has now spread beyond London and the South East.’
After a modest slowdown in market activity over the summer, the volume of sales agreed by agents has now reached levels similar to those seen in the late spring and early summer. Sales agreed over November, compared to October, were up 4.8 per cent with the greatest increases in the Eastern region (10.7 per cent), the South West (12.3 per cent) and London (7.1 per cent) – albeit, in the case of the Eastern and South West regions, off a low base.
The market movement has little to do with first-time buyers, however, says Donnell, as ‘the majority of property transactions being carried out by those that are already on the housing ladder or are being assisted in some way. However, we do expect the recent increase in interest rates to impact on levels of activity in the months ahead with the market likely to experience a seasonal slowdown over December.’
Hometrack forecasts 2007’s annual house price growth to be four per cent, he says, with ‘London and the South East expected to remain the primary engines for growth, with prices being driven by a continuing supply/demand imbalance.’