Property Shortages Push Prices To Six-Year High

Property prices are at their highest level for six years, partly due to a shortage of homes for sale.

Surveyors sold an average of 23 homes during the three months to March - the highest number since February 2008, according to the Royal Institution of Chartered Surveyors (Rics).

All areas except Wales, where the level was unchanged, saw a rise in interest from buyers.

Outside of London and the South East, prices saw the most noticeable growth in the South West and the East Midlands.

But while buying activity is rising in more regions, the expected "spring bounce", which sees more people put homes up for sale, has not happened, Rics said.

The mismatch between the lack of supply from sellers and rising demand from buyers is a "major concern" and is continuing to put an upward pressure on prices, the surveyors' body said.

More homes are needed in areas where people want to buy

Simon Rubinsohn, Rics chief economist, said: "Now that the housing market recovery is well and truly under way and mortgage finance is more readily available, buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East.

"That said, it is a major concern that we are not seeing enough houses coming on to the market.

"For the market to operate effectively, we desperately need more homes in areas where people want to buy and want to live.

"Until this happens we're likely to see prices continue to increase and it is going to be ever harder for many first-time buyers to conceive of ever owning their own home."

Government support schemes such as Help to Buy have made mortgages more widely available, particularly for people with only smaller deposits saved who may have previously been struggling to get a deal.

But critics of the scheme argue the impact it is having in pushing up demand, without a corresponding increase in the supply of homes, is also pushing up house prices and encouraging people to stretch their borrowing.

Toughened mortgage lending rules are coming into force later this month with the aim of preventing overlending to borrowers who may end up having trouble paying back, particularly when interest rates rise.

Housing Minister Kris Hopkins said: "Leading developers have pledged to build more as a direct result of this increased demand, and we've already delivered 420,000 new homes since 2010, including 170,000 new affordable homes."

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