Marché Nouvelles

(Bloomberg) --

Asking prices for U.K. homes rose at the fastest annual rate in almost six years as the number of available properties dropped to a record low.

Online property portal Rightmove Plc said the price that sellers sought in January was 7.6% higher than a year earlier at 341,019 pounds ($467,000), the strongest growth since May 2016. Compared with December, the average price rose 0.3%.

Britain’s housing market continues to boom despite the end of a temporary tax break last year and an interest-rate increase in December, propped up by a chronic shortage of properties on offer and mortgage costs near a record low.

“Prices are likely to continue to rise until more choice is available,” Tim Bannister, Rightmove’s director of property data, said in a statement released Monday. “It’s clear that the trends which defined the market in 2021 have carried over into this year.”

There were signs that bottlenecks in the supply of new homes have begun to ease, however. The first working week of 2022 was “the busiest start of the year ever” for homeowners preparing to sell. The number of valuation requests was 44% above January 2021 levels and 48% above January 2020, before the pandemic struck. 

For now, strong demand is colliding with historically low supplies of properties on the market. There was a 15% increase in enquiries from prospective buyers, and the number of homes on the books of each agent fell to an average of 12, a new record low.

The Bank of England’s decision to lift the benchmark interest rate from 0.15% to 0.25% appears to have had little impact so far. A separate survey published on Saturday by OnTheMarket, a rival property portal, found that optimism continues “unabated” with three quarters of buyers confident of making a purchase in the next three months.

However, it warned that “over the coming months house price growth may start to tail off” as more properties come onto the market and buyers respond to increasing mortgage rates.

The jump in average asking prices in January was driven by the most expensive homes and properties targeted at first-time buyers, which hit record levels, according to Rightmove.  

London asking prices fell 1.2% last month. That left the annual pace of growth in the capital at 4.2%, the slowest of any region except for Scotland.