Lack of supply fuels biggest property increase in UK for 16 months, figures show

A lack of supply has led to the average property in the UK increasing by £6,000 in the last month, according to the latest figures to be published.

Asking prices increased by an astonishing 2.8% in October which is normally a quiet time of the year for the country’s real estate market with London leading the way with a 6.5% rise, the date from Rightmove shows.

These figures mean that the market has now seen its first annual property price rise for 16 months with year on year prices by 0.2%. The monthly price gain is also the largest for the month of October for six years.

There is still considerable concerns in the property industry about volatility in the market especially since there is to be a crackdown on ‘lax’ lending in the UK with the country’s Financial Services Authority expected to outlaw self certified loans and demanding that lenders carry out more stringent checks to make sure home buyers can pay back what they take on.

Other concerns centre on rising unemployment and the impact of an expected change of government when the UK general election is held next year. Experts believe it will prompt a slowdown in the market as buyers and sellers wait to assess the outcome.

‘Current price recovery is based on an unusually thin market with transaction levels still 54% down on 2007,’ Rightmove said. ‘Ongoing lack of supply is driven by home owners deciding not to move given the current economic backdrop.’

A return to banks paying large bonuses to staff may also be fuelling demand in London with some of the capital’s most expensive areas increasing sharply in price, suggesting deals are primarily being done at the higher end of the market. Rightmove has found that there is a shortage of cheaper properties available at present with some agents virtually ‘sold out’.

Miles Shipside, commercial director of Rightmove, has pointed out that a market so advantageous to sellers was ‘highly unusual’ in October, which is generally subdued. ‘With political and economic uncertainties ahead, this does not seem to constitute a return to boom times,’ he warned.


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