The average asking price of a home in England and Wales has jumped by around £20,000 since the beginning of the year, according to the latest Rightmove House Price Index.
A typical home on the market now has a price tag of almost £250,000, an increase of 8.8% since the beginning of the year. This is despite a seasonal dip in August, when prices fell 1.8%.
Asking prices for flats and apartments hit a new record in August, due to demand from first-time buyers and buy-to-let landlords.
Property transactions are up 5% but the supply of property coming to market is lagging behind, having increased by just 0.2% so far this year.
Miles Shipside, Rightmove director and housing market analyst, said: “A holiday season price dip is the norm in August, with an average drop in the last five years of over 2%. Even with this month’s below par 1.8% fall, the national average asking price is still up by more than £20,000 so far in 2013.
“Demand is already on the up, and that’s before the roll-out of phase two of the Help to Buy stimulus. It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices. Flats are most in demand by first-time buyers and buy-to-let investors and we have seen prices for this property type hit their highest ever level as supply fails to keep up with an increase in demand at the bottom of the market.”
Unless supply improves, through more sellers, new-build homes and residential conversions, growing demand from buyers could spark a return to excessive house price inflation, the report warned.
Asking prices have been distorted by strong growth in London and the South East, Shipside said. Prices in the capital are 10.2% higher than this time last year compared with an average of just 2.8% for the rest of the country.
But while prices are up, transaction volumes still remain constrained by risk-averse lenders’ high deposit requirements and a lack of fresh property supply.
"We are already seeing early signs of demand outstripping supply and the Government needs to ensure that the current new build Help to Buy scheme, and its extension in January to second-hand homes, deliver more properties onto the market as well as boosting demand,” said Shipside.