This is the largest overall growth observed since Sept 2014 when the London property boom was at its peak, according to Home.co.uk
Vast artificial demand continues to wipe out supply as property for sale in England and Wales drops again, setting a further all-time low of 291,025, 25.8% lower than in May 2020 and 36.1% less than in May 2018, according to the latest figures from Home.co.uk.
According to the latest analysis, the stimulus measures of the extended Stamp Duty holiday, furlough scheme and government-backed 95% mortgages, together with the urban flight trend, has seen home prices in England and Wales grow 8.6% overall during the last twelve months, despite a lacklustre London market plagued by oversupply and reduced demand.
Home says that this is the largest overall growth observed since Sept 2014 when the London property boom was at its peak. Of course, this growth may well extend higher next month, driven by a record-breaking surge in mortgage lending that has soared far above the previous high set in 2007.
Pumped up by £11.8bn of fresh mortgage lending in March alone, the market is booming. Soaring demand is evident everywhere except London, with seemingly unlimited credit feeding an insatiable appetite for the little stock available. Across the UK, the number of properties entering the market is currently 16% lower than it was two years ago, and in many regions, the supply shortfalls are much more severe.
Put simply, supply is overwhelmed by demand and consequently, the total stock of property for sale in England and Wales has fallen again, to an all-time low.
Greater London remains the exception despite the flood of mortgage credit, showing the lowest growth in home prices and plummeting rents due to the de-urbanisation trend and lack of foreign visitors. Oversupply in sales and letting remains evident and this trend looks set to continue despite the successful vaccine rollout.
Further sales supply (up 35% compared to April 2019) into an already saturated market will further hamper asking price growth in London going forward. Flats have been most affected and the median asking price within a 10-mile radius of the centre remains 9% down on May 2020.
Beyond beleaguered London, rents continue to rise rapidly in most regions due to lack of supply.
Supply was already falling pre-COVID due to increased taxation and greater red tape deterring landlord investment and now demand has been boosted by urban flight. Given the overwhelming demand for rental property in non-urban settings, supply cannot rise anytime soon to meet demand. Home says that they, therefore, expect that rents will continue to rise in the near term.
The annualised mix-adjusted average asking price growth across England and Wales is currently +8.6% and further increases look inevitable; in May 2020, the annualised rate of increase of home prices was just 0.4%.
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