House prices in England and Wales rose by the largest monthly amount for three years in March.
Prices in London powered the rise, going up by 0.7 per cent, the highest increase in the capital since February 2010, as prices in the property market in the rest of England and Wales helped overall prices rise by 0.3 per cent.
To illustrate the rising demand of property for sale in the capital, the length of time it takes to sell a home from when it comes on to the market has fallen to just 4.9 weeks, the lowest level since October 2007. By contrast it takes 11.8 weeks to sell a home in Northern and Midlands regions.
Prices went up in 60 per cent of London postcodes but in only 23.9 per cent of other parts of the country.
Asking prices were met 95.3 per cent of times in London, the highest level since August 2007, 94.3 per cent of times in the South East, the highest rate since July 2010 and in 93 per cent of cases across the rest of the country.
The survey confirms the growing divide between London and the rest of the country, though prices fell in only one region; the North East.
Richard Donnell from Hometrack said: “The impetus for growth continues to be London where prices rose by 0.7% over the month, the highest increase in the capital since February 2010. A general improvement in market conditions was reflected across the country with prices falling in just one region (North East).”
The strongest house price growth outside of London was seen in East Anglia and the South East, where prices went up by 0.2 per cent.
One reason for the big monthly rise is that the supply of homes continues to be outstripped by demand.
Hometrack says supply has risen by just 13 per cent in the last two months and by just 3.5 per cent over the last six months, whilst demand has risen by 19 per cent in the last two months.
Mr Donnell said: “A lack of housing for sale underpins the boost to prices. Low growth in the number of new homes coming to the market, rising demand at a seasonally strong time of the year, and a jump in sales agreed has led to depletion in the number of homes for sale which in turn has reinforced scarcity and price rises.”
Hometrack believes the support given to the property market by the Funding for Lending Scheme (FLS) and other measures from last week’s budget will provide even more support to property prices.
High stamp duty costs are likely to give more impetus to property sales outside of the capital which provide better value for money, according to Hometrack.
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