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Shrinking supply boosts London property prices

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
28/05/2013

Housing supply in London has fallen in the last six months, prompting prices to rise in the capital.

According to the property firm Hometrack, house prices in the London region increased by 0.9% in the six months to May, driven by a 15% rise in demand. In this period, housing supply in the capital shrank by 0.6%.

The property said that the gap between supply and demand in London is currently at its widest level since spring 2009.

Across the country, the average house price rose 0.4% in the last month, the biggest since month increase in six years. East Anglia, East Midlands, South East, South West and West Midlands were the other areas to show house price growth while the North East, North West, Wales and Yorkshire & Humberside were flat.

The average time a property spends on the market before sale is presently 8.8 weeks, although a sharp disparity between northern and southern regions remains.

Hometrack’s director of research Richard Donnell said: “High moving costs, uncertainty over the outlook for jobs and a lack of available housing to move to, means homeowners remain unwilling to put their own properties on the market. This is only serving to limit supply further.

“Talk of improving market conditions is likely to result in more marginal sellers entering the market in the coming months. The danger is that the pressure to secure instructions will lead to properties being put on the market at unrealistically high prices. This in turn will result in fewer sales and a period of price re-alignment.

“What we are seeing is the continuation of a series of small ‘mini housing cycles’ which have been in evidence over recent years.”

 


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