House prices fuelled by supply/demand imbalance - Mortgages - News - Moneyfacts

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

House prices fuelled by supply/demand imbalance

House prices fuelled by supply/demand imbalance

Category: Mortgages

Updated: 03/02/2014
First Published: 03/02/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The latest National Housing Survey from property analysts Hometrack has revealed that house prices rose yet again in January, this time by 0.3%, with analysis finding that the housing market is underpinned by the largest supply/demand imbalance the sector has seen since 2009. Understandably, it's thought to be this that's fuelling those price rises.

The marginal monthly increase might be showing the slowest rate of growth for six months, but this is expected at this time of year – seasonal factors have historically always meant that house prices rise less significantly during the festive season. No regions reported monthly falls, while on an annual basis prices have actually risen by 4.8%.

It's a strong start to the year for the sector as a whole, with the average time a property stays on the market being 8 weeks – in January 2010, it stood at 10 weeks – while in positive news for sellers asking prices are being achieved more readily with the average discount being less than 5%, a drop from 7% a year ago.

However, the supply of new homes for sale has decreased significantly over the year. It fell by 6.6% in January alone and by 17% over the last five months, and despite analysts expecting a seasonal uplift in terms of homes coming onto the market there could still be a distinct supply/demand imbalance for some time – particularly as demand is also expected to continue, thanks to a combination of low mortgage rates, increased first-time buyer activity and positive news for the economy as a whole.

Richard Donnell, director of research at Hometrack, has this warning:

"Supply will only improve through more existing home-owners putting their property on the market, investors looking to capitalise on recent price gains and increase in new supply from builders… If sellers remain slow or reluctant to enter the market in expectation of further price gains, then the upward pressure on prices will build rapidly once again."

What next?

Make the most of record-low rates – check out the best mortgage deals
Use our mortgage calculator

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Building societies winning the mortgage rate war

Competition is fierce in the mortgage market, and borrowers may assume that the rates from banks will be significantly lower than those elsewhere. However, things aren’t as they seem, as building societies are the winners of the mortgage rate war.

Homemover numbers fall for first time since 2011

The mortgage market enjoyed a record year in 2016, so it may come as a surprise to hear that the number of people moving home has fallen for the first time in five years, with fewer apparently taking advantage of the market.

2016: the best year for remortgaging since 2009

Remortgaging has certainly seen a surge in activity of late, helped in no small part by the dramatic drop in mortgage rates over the last year, so much so that 2016 as a whole proved to be the best year for the sector since 2009.