According to Home.co.uk's Asking Price Index house prices in England and Wales have risen a further 1% in the last month, the biggest monthly rise since May 2011, and are up an impressive 5.5% on last year.
This rapid growth is still being led by London where prices were up 2% last month and are a whopping 12% higher than in October 2012, but the recovery is spreading with more areas contributing to the growth – in fact, Scotland is the only area of the UK that's reported house price deflation (at -1.4%) over the last 12 months.
The South East reported price rises of 7% since October 2012 whilst the South West is tipped to become another high-performing region with a growth of 4.6% in the last 12 months, and the recovery is even spreading northwards with the East Midlands reporting price rises of 4% and the West Midlands showing a 3.5% increase.
But there's growing concern that regional bubbles could eventually burst. The imbalance between supply and demand continues to fuel the level of house price inflation as demand for housing far outstrips supply, and the situation is only getting worse.
Across the UK the supply of fresh stock is down 18% on this time last year whilst in London there are 31% fewer properties coming to market, and although it's good news for sellers with the average time on the market falling 8% over the last 12 months it means house prices are continuing to rise – bad news for homebuyers, whose average 1% salary increase can't compete with such rapidly rising house prices.
Of course, there are still marked regional variations, but figures suggest that despite Government-backed schemes (such as Help to Buy) affordability will continue to be an issue in the housing market for some time.
Doug Shephard, director of Home.co.uk, commented on the figures:
"House price growth is now sweeping north and west from the capital. Welcome news for homeowners, but troubling for potential buyers whose salaries are not increasing anywhere near as fast.
"Until real wage growth matches house price inflation, housing affordability will become increasingly difficult and a distant dream for many."
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