House prices increased by 0.6% in March with the growth in demand outstripping supply, Hometrack has reported.
Half of the country registered a price increase in March for a second month in a row. The proportion of the asking price being achieved reached a 10-year high at over 96% while in London, the percentage is over 99% as a broad mix of buyers chase a scarce supply of homes for sale.
Richard Donnell, director of research at Hometrack, said: “Much has been made of the impact of Help to Buy but the overall volumes of sales supported by the scheme remain relatively small. The real driver of higher house prices is record low mortgage rates and strong demand from first time buyers and investors who have no property to sell which is compounding scarcity.
“With average mortgage rates currently at 3% or lower, compared to over 5% before the downturn, households have seen a significant boost to buying power who are now being priced into the market on improved buyer confidence.”
The number of new buyers registering with agents grew by 6.6% in March. In contrast, the supply of housing for sale expanded by just 1.9% over the month. Strong sales volumes are eroding the stock of homes for sale. The gap between supply and demand has been extended for the last five months and points to further price rises in the months ahead.
Donnell added: “The latest survey results shows that the recovery in house prices continues to spread away from London and the South East. The year on year rate of growth is now in positive territory across all regions for the first time since 2006.
“However, in four regions the rate of house price growth remains below 2% with prices rising slowly off a low base (North, North West, Yorkshire & Humberside, East Midlands).”
