House prices increase 0.3pc in January
Average prices grew 0.3% over the month with the annual rate of growth increasing to 4.8% (from 4.4% in December).
Richard Donnell, director of research at Hometrack, said: “Despite the lowest monthly increase in house prices for six months (July 2013), underlying market conditions remain strong with the market starting 2014 in a better position than a year ago.
“The time on the market indicator currently stands at 8 weeks, compared to 10 weeks in January 2013.
“The proportion of the asking price being achieved has narrowed from 93% to less than 95% over the same period.”
Market conditions remain strongest in London and southern England where price increases were highest in January (London +0.6%, South West and East Anglia +0.4%).
These regions have also seen the greatest declines in the supply of housing for sale in recent months.
While London has been the engine for house price growth in recent years, the survey shows the rate of growth increasing in other markets as confidence spreads.
Dorset (0.9%), Cambridgeshire (0.7%), Northamptonshire (0.7%), Devon (0.6%) and Essex (0.6%) all registered above average growth in January.
Donnell said: “Positive news on the economy and jobs is set to support demand in the coming months.
“Continued low mortgage rates mean that households with access to equity have significant buying power in the market and this will support the impetus for continued price increases in the months ahead.
“The scale of house price inflation in the near term will depend to a large degree on whether there is a sustained supply response from sellers and how far this improves the alliance between supply and demand which is at its widest level since 2009.
“The supply of homes for sale has fallen over each of the last five months, contacting by a total of 17%.
“Increased activity by first-time buyers, who do have a property to sell, adds to the supply side pressures as do investors buying homes to let out for rent.
“We estimate that first time buyers and investors, with a mortgage and cash, currently account for up to 40% of all housing sales. Supply will only improve through more existing home-owners putting their property on the market, investors looking to capitalise on recent price gains and increase in new supply from builders.
“We expect supply to register a seasonal increase in the coming months but the general trend over 2013 was supply failing to keep pace with demand and putting extra pressure on prices.
“If sellers remain slow or reluctant to enter the market, in expectation of further price gains then the upward pressure on prices will build rapidly once again.”