House prices have risen by 0.5% in March according to the latest survey from Hometrack, the housing research and data company.

This is the fourth consecutive month of house price growth and the highest monthly rise since the summer of 2004.  Over the past 12 months house prices have risen by +0.1%, the first annual rise since January 2005.  The national average house price now stands at £162,500.

“A resurgent market in London, where prices grew by 1.1%, has put something of a gloss on the headline results” comments Richard Donnell, Director of Research. “Whilst prices moved 0.4% higher in the South West, East Anglia and the South East, growth in all other regions has been far more limited” he adds.

“This divergence in performance between London and the rest of the country is a result of a number of factors.  A lack of new housing coming onto the market for sale in London is supporting particularly strong price rises at the moment.  This, combined with the fact that London has underperformed in terms of house price growth over the last few years means that incomes and house prices in the capital are more closely aligned than is the case in other regions. In contrast, affordability levels remain stretched across much of the country and we expect the divergence in growth between London and the rest to continue over the year ahead.” Donnell concludes.

Demand still rising faster than supply

A key feature of the last three months has been the growing mis-match between the number of new buyers entering the market and the amount of housing for sale. This is providing an important support to price levels.  Nationally there was a 7% rise in buyers over March compared to a 3.7% increase in the number of new properties for sale. In London, the stock of properties for sale grew by just 1% over March whilst demand grew by 10%.

Modest improvements in time to sell and achieved prices

Despite signs of more buoyant demand there has only been a slight improvement in the proportion of the asking price being achieved over March. Sellers are achieving 94.3% of the asking price, up from 94.2% last month.

Properties are also selling slightly more quickly whilst the average number of viewings per sale has decreased.  There are some major differentials between the regions. For example, the average time to sell a property is 4.5 weeks in London compared to over 9 in the East Midlands and the North West where growth remains sluggish.

Local price trends

At a more local level, and away from the capital, prices have picked up in other parts of the country – mainly cities in the South of England.  Cities in the north of the country saw slower price growth, with Manchester, Liverpool and Newcastle all reporting growth of just 0.1%.

The areas reporting the highest rises over March are all across London: Central London & City (1.9%), East London (1.4%), North London (1.2%), West London (1.2%), South-West London (1.0%) and South-East London (0.8%). Away from the capital, other parts of the country where prices have picked up over the month include Berkshire (0.7%) and East Sussex (0.6%).  The under-performing counties this month are Derbyshire (-0.1%) and the Isle of Wight (-0.1%).