House prices grew by 0.8% in March, says Hometrack

The latest national housing survey from Hometrack shows that average prices grew by 0.8% in March up from 0.7% the previous month.

The year on year rate of growth now stands at 6.7%, compared to just 0.1% the same time a year ago.

Hometrack says this is the highest year on year rate of growth since June 2003.

Richard Donnell, director of research at Hometrack, says: “The headline figures continue to be distorted by a robust London housing market that appears largely disconnected from the rest of the country where the impetus for price growth is far more subdued.

The monthly Hometrack survey shows that average house prices in London grew by 1.8% over March, the largest monthly increase in the capital for over four years since July 2002.

A lack of housing for sale combined with strong competition from buyers resulted in average prices rising across more than 80% of postcodes during March.

Donnell adds: “What we are seeing is a ripple effect. Last year levels of house price growth were being driven by the high value, prime housing markets in central London.

However, looking at the first three months of this year house price growth has picked up in London’s suburbs where demand is being driven by the need for family housing.

Over March the highest increases in average values were seen in Sutton (3.5%), Merton (3%) and Brent (2.4%) compared to just 1.6% in Westminster.

The recent strength of house price growth in London is also having a clear knock on effect on the commuter areas around the capital.

Average house price growth was 0.8% in both East Anglia and the South East over March.

The strongest growth was seen in Berkshire, Kent, Suffolk, Buckinghamshire, Hertfordshire and Surrey which all registered above average growth.

Away from the markets influenced by the London economy, house prices remain largely subdued.

House price growth across the remaining seven regions of the country ranged from between 0% in Wales to 0.3% in the South West.

Donnell adds: “This latest survey highlights a growing dilemma for policy makers.

“Higher interest rates and increased affordability pressures are clearly limiting house price growth across large parts of the country.

However, supply shortages combined with confident buyers is resulting in an acceleration in house price growth in London.”