Property company Rightmove said the annual growth rate of property prices reached 7.3%, the highest since October 2007.
Housing supply is still up 13% on the previous year, but supply shortages are still fuelling prices in many areas in the south. By contrast, northern regions are still an average of 6% behind October 2007 benchmark.
Miles Shipside, Rightmove director and housing market analyst said: “Records are tumbling, with a new national asking price record being set for the second consecutive month. London’s asking prices are at their highest ever level, and the strong ripple effect from the capital has also caused a new wave of record prices for property coming to market in the South East, the South West and East Anglia.”
All four of the southern regions, which are Greater London, South East, South West and East Anglia are ahead of where they were in October 2007, with London the stand-out performer at +41.8%.
Shipside said: “While much of the growth since October 2007 is down to the boom in London, the ripple effect from the capital means other southern regions are starting to play catch-up. This is evidenced by all of them now having property coming to market at average prices above the levels we recorded in October 2007, whereas all northern regions are still below that benchmark. While London’s new sellers were asking an eye-watering £168,711 more than six and a half years ago, the northern regions are actually down by an average of £10,653, with the North West still £16,049 adrift.”
Price pressures could begin to ease in some areas said Rightmove.
Shipside said: “Supply in much of the south is ridiculously tight, with for sale board black spots in many popular locations within easy commuting distance of London.”
Tighter lending criteria under the Mortgage Market Review (MMR), already implemented by many lenders and mandatory from 26th April, may lessen buyer demand by making it harder to get the required mortgage, he said.
“The latest Bank of England seasonally adjusted mortgage approval statistics for February showed an 8.8% drop in the total value of mortgages approved for property purchase compared to those in January,” he said.
However, Shipside suspects the drop off in approvals is more to do with slower processing by lenders as new systems are introduced to comply with the MMR requirements, and volumes will recover.
Shipside speculated: “While lenders have had their cards marked and lending is far more responsible, many have big lending targets for 2014, and are in a more competitive arena with access to cheap money. Whilst a higher percentage of borderline mortgage applications will be weeded out, the overall numbers of those who are mortgage-worthy and wish to borrow and buy, combined with lenders who are flushed with funds, is still likely to result in increased buyer demand.”
