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London homes selling at fastest pace since 2007

Properties in capital are selling at fastest rate since peak in 2007, leading a third month of price increases in the resurgent UK market

PUBLISHED : Wednesday, 01 May, 2013, 12:00am
UPDATED : Wednesday, 01 May, 2013, 3:44am

London homes changed hands at the fastest pace since 2007 last month as the capital's property market drove a third month of UK house price increases, property researcher Hometrack said.

Average values in England and Wales rose 0.3 per cent, the same as in March, which was the largest gain in three years, the London-based firm said.

In London, prices jumped 0.7 per cent and homes stayed on the market for an average of 4.6 weeks, the least since October 2007.

"The real driver of price rises in April has been the London market, where demand has grown three times faster than supply over the last quarter," said Richard Donnell, director of research at Hometrack.

In the city, key market indicators, such as the time on the market, were now back to levels last seen during the peak in 2007, he said.

Better sentiment and a shortage of properties for sale are "key features" of the housing market that are supporting values, Hometrack said.

Plans announced by the government last month to assist prospective homebuyers and the fact that the economy returned to growth in the first quarter will bolster confidence further over the coming months, it said.

Five out of 10 regions assessed by Hometrack showed price increases last month compared with March. Four showed no change and one, northeast England, recorded a 0.1 per cent drop.

After London, the area with the next-largest increase was Wales, with a 0.2 per cent gain.

Demand for housing nationally rose at a slower pace, with new buyer registrations growing 3.1 per cent compared with 4.6 per cent in March. Still, the supply of housing for sale failed to keep pace, with agents reporting a 2.8 per cent increase in homes coming to the market.

"In each of the last three months, the growth in supply has failed to keep pace with demand and this is providing strong upward pressure on pricing, particularly in those markets with the shortest selling periods," Donnell said.

The time taken to sell a UK property fell to 9.1 weeks last month, compared with 9.5 weeks in March, Hometrack said.

Investors from regions such as the Middle East and the euro zone are fuelling purchases of real estate in prime London districts such as Belgravia, Knightsbridge and Mayfair as a haven from economic and political unrest at home.

Former Bank of England policymaker Sushil Wadhwani said "money seems to regard London and a few other places as the appropriate place for it to be parked" during a crisis.

A report from Lloyds TSB last week showed the number of homes sold valued at more than £1 million (HK$12 million) rose 2 per cent to 7,397 last year, the highest level in five years.

Still, the Lloyds Banking Group unit said sales of homes worth at least £2 million fell 2 per cent to 1,584.

In a separate report last week, Lloyds Bank said a survey of UK businesses showed their confidence in the economy compared with three months earlier rose to 27 in April from 20 in March.