House prices rise at fastest pace for six years

House prices have notched up their highest monthly increase in six years, driven by demand in London and the South-east.

According to the latest Hometrack survey, house prices rose by a national average of 0.4% this month, the highest rise since a 0.6% increase in May 2007.

The property analytics firm said the trend was driven by London and the South-east, where prices rose 0.9% and 0.5% respectively.

It cautioned that the rise in prices was driven by the gap between supply and demand, which saw a 2.8% rise in new homes coming to the market but agreed sales rising 8.2%.

Hometrack research director Richard Donnell said London and the South-east were clearly driving the rise in prices, as rises in the rest of the country averaged 0.1%.

“Respondents to the survey reported a lack of housing for sale as one of their greatest concerns in the market at present with one reporting the lowest levels of stock for 15 years,” he said.

“In London the gap between supply and demand is the largest it has been since spring 2009.

“In the last six months demand has grown 15 per cent while supply has declined by 0.6 per cent. The net effect has been house prices rising at level not seen since May 2007.”

Hometrack said the average time property spent on the market had fallen back to 8.8 weeks - the lowest level since July 2010. Regionally, homes spent an average of t 7.2 weeks on the market in southern England compared to around 11 weeks in the Midlands and the North.

Looking forward it said that a growing proportion of property was likely come to the market at “unrealistically high” prices as estate agents vied to secure instructions.

Hometrack said its latest figures showed that homes were achieving just under 94% of their asking prices.