Hometrack has reported that house prices are rising but sales volumes have fallen in the last year.
Higher stamp duty for those buying second homes and the EU referendum are set to impact growth in sales volumes in 2016 and the rate of growth, especially in southern England where these policy and external factors are likely to bite the most, it said.
The report found that city level house price inflation is running at 10.2%, up from 8.6% a year ago.
House prices are rising but the number of housing sales fell over last 12 months – down by as much as 20% in Cambridge and 7% in London. Lower sales volumes in high house price growth cities raises further questions over the sustainability of house price growth.
Hometrack said that the near term prospects for the market are increasingly being influenced by the impact of external factors and policy changes, not least stamp duty changes and the EU referendum.
Based on the evidence from Scotland, the EU referendum will impact market activity but the initial impact period will be shorter, it said.
Stephen Smith, director, Legal & General Housing Partnerships, said: “These latest figures show that house prices have risen by over 10% annually, which once again highlights the urgent need for housing supply to meet the current high demands. The sad truth is that many consumers are now being priced out of certain areas altogether, resulting in a major gap between those who can afford their desired locations and those who have to move away.
“In order to ease this, more houses need to be built around UK cities so that people can afford to live in their first choice locations and enjoy a higher quality of life. The Government should therefore explore all possible avenues in order to bridge the gap between the properties currently available on the market and prospective buyers. One option is for people to ‘rightsize’ to a more suitable property, as this will free up larger homes for families to use, which will result in a more fluid property market for everyone.”
