UK residential property prices rose on an annual basis for the first time in 16 months fuelled by a lack of supply, according to figures released today by Rightmove.
Asking prices increased year on year by 0.2% and by 2.8% this month, the biggest monthly increase since February and the largest for the month of October in six years, Rightmove said. But there is still consierable concerns in the property industry about volatility in the market especially since there is to be a crackdown on 'lax' lending in the UK with the country's Financial Services Authority outlawing self certified loans and demanding that lenders carry out more stringent checks to make sure home buyers can pay back what they take on.
Other concerns centre around rising unemployment and the impact of an expected change of government when the UK general election is held next year. Experts believe it will prompt a slowdown in the market as buyers and sellers wait to assess the outcome.
'Current price recovery is based on an unusually thin market with transaction levels still 54% down on 2007,' Rightmove said.
'Ongoing lack of supply is driven by home owners deciding not to move given the current economic backdrop.'
London led October's gains, with prices up by 5.2% on the year and 6.5% on the month, taking the average asking price to a record high of £416,157.
'Lack of fresh stock is the driving factor behind this record high,' Rightmove added.
A return to banks paying large bonuses to staff may also be fuelling demand in London with some of the capital's most expensive areas increasing sharply in price, suggesting deals are primarily being done at the higher end of the market. Rightmove has found that there is a shortage of cheaper properties available at present with some agents virtually 'sold out'. But Miles Shipside, commercial director of Rightmove, pointed out that a market so advantageous to sellers was 'highly unusual' in October, which is generally subdued.
'With political and economic uncertainties ahead, this does not seem to constitute a return to boom times,' he warned.
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