House prices in England and Wales are growing at their fastest rate in six years, according to property market analysts Hometrack.
The increase for May was estimated at 0.4pc, the fastest monthly increase since May 2007, shortly before the emergence of the credit crisis and the property market crash.
May’s rise was driven by a buoyant market in the South East, where values rose by 0.5pc. But prices in the capital sped ahead even faster, rising by 0.9pc in May.
Hometrack blamed a scarcity of homes in the South, particularly in London, where demand had grown by 15pc in the past six months while supply has fallen by 0.6pc. With the figures for London and the South East stripped out, the monthly rise for the rest of England and Wales was just 0.1pc.
A Hometrack statement said: “While the growth in buyer numbers is following a similar pattern to recent years, it is a lack of housing for sale that is acting as the primary driver of price rises.
“The number of sales agreed is outstripping the number of new properties coming to the market. Nationally, new supply grew by 2.8pc in May while sales agreed were up by 8.2pc. The gap between supply and demand in London is the largest it has been since spring 2009. In the last six months demand has grown by 15pc while supply has declined by 0.6pc.”
Properties are also selling quicker with sellers achieving prices closer to their asking prices. The average time on the market fell back to 8.8 weeks – the lowest level since July 2010 – with the sharpest falls in southern England at 7.2 weeks on the market, compared with around 11 weeks in the Midlands and the North.
The percentage of asking price achieved was just under 94pc, the highest level since July 2010.
Richard Gordon of UKPI commented on the report: “The housing market is in much healthier shape today than it has been since the beginning of the downturn in 2007. The housing market relies on confidence and clearly there is plenty of that around at the moment. There has been a significant change in sentiment and many consider this an ideal time to get into the market, with low interest rates, better mortgage availability and several Government backed incentives such as the Help To Buy scheme.”