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23/02/2010
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House prices increased 3.2 per cent in February, the highest monthly increase for two years, and now stand 6.1 per cent more than a year ago. according to the latest house price index from Rightmove.
The property website reported house prices saw an average increase of £7,137 over the month and there has been no greater increase since April 2007 when the value of abodes went up 3.7 per cent.
Miles Shipside, commercial director of Rightmove, said this average increase of more than £7,000 was surprising given the difficult UK and global economic picture, and warned it would not be sustainable given the limited amount of mortgage finance available.
However he added property in popular locations remained in short supply, therefore supporting upwards price pressure for the time being.
This resulted in Rightmove recording the highest ever average house price for London at £427,987.
Mr Shipside said: "A price jump of over 3 per cent is more comparable with the pre-credit crunch boom-times.
"Property for sale remains scarce in popular areas, but new supply to the market has to be priced at what buyers are willing and able to pay.
"An average increase of over £7,000 may prove to be a bit too spicy for some buyers' tastes, now that economic constraints have forced them to develop a simpler palate."
Meanwhile, the index revealed the number of properties coming to market increased by 19.8 per cent compared with the same period in 2009.
In addition, average national asking prices are now 6.1 per cent or £13,300 more than a year ago.
Mr Shipside has predicted new property coming to the market will continue to be at greater prices in the first half of 2010, but warned sellers to be aware of the paradigm shift that has occurred in the residential mortgage-backed securities market.
He said: "Sellers are starting to appear in greater numbers, but they must realise this market is more akin to the mortgage-rationed times of the 1970s and 1980s than to more recent times of relatively easy mortgage availability.
"For individual sellers it is hard to grasp the bigger picture and they rightly hope they will find a buyer who can get the required share of the rationed finance that is available.
"This works after a fashion while the number of sellers remains limited. However if sellers return to the market in larger numbers the current upwards price pressure will not be sustainable with the restricted number of buyers."
Source - www.ftadviser.com
The opinions expressed within this article are the views of the writer and do not necessarily reflect the views and opinions of Mortgage Options
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