The latest index from Rightmove has shown that asking prices have risen by £5,767 (1.8%) over the last month, reaching a new record of £333,564 in May.
Across the UK, house prices have also hiked up by 6.7% when compared with March 2020, although no direct comparisons were made due to the property market falling flat during lockdown last year.
Property prices in London were severely affected since lockdown with only a £640,373 (0.2%) rise since March 2020.
Wales has seen a resurgence with a steep hike of 13% over the same period and asking prices have now reached £225,161.
The North-West followed a similar pattern with a £223,446 (11%) rise, whilst Yorkshire and the Humber rose by £216,614 (10.5%).
The price of a property in London is still on average 2.9 times more than in Northern areas and although the divide is still big, this is the smallest ratio recorded by Rightmove since 2013.
A reminder that the UK is still suffering from a housing shortage is the demand for new houses that still outweighs supply, despite the number of new properties that are coming on to the market for sale, especially in the Northern market and the market for family sized homes.
Tim Bannister, Director of property data at Rightmove comments “Last year’s unexpected mini-boom is rolling on into 2021, with new price and market activity records again defying many predictions.
“Buyer affordability is increasingly stretched, but there’s obviously some elasticity left as many buyers are squeezing their way into higher price bands.
“This high demand, with both willingness and ability to pay more, has pushed the average price of property coming to market to a new all-time high of a third of a million pounds.”
Bannister adds: “There appears to be more headroom in buyers’ budgets among those looking to upsize.
“Family homes with three bedrooms or more are like gold dust in many areas of the country, especially in parts of the north.
“For example, compared to the same period in 2019 agents in the North East have 59% less available stock for sale in the ‘second-stepper’ sector made up predominantly of three bedroom homes, while Scotland is 65% down in the ‘top of the ladder’ four bedroom or more sector.
“In contrast London’s available stock is down 20% and 24% respectively in these sectors, so while supply is still limited it is more closely matched to demand.
“Another important factor driving the higher demand and quicker average time to sell in the north is that more of their sellers are intending to buy and stay local, whereas many Londoners are looking to move out.
“Rightmove research among those intending to sell in the next 12 months shows that an average of 84% in the north are looking to move locally, compared to only 52% in London.
“The pandemic has changed many aspects of what people want from their homes, and the pricing pendulum is swinging away from London towards the north.”
Becky Munday, Managing Director at London based Munday’s Estate Agents said “People are now prepared to go even further in their race for space, with many more no longer chained to traditional commuter barriers or southern cities. “In London we’re seeing immediate knock-on effects of a working-from-home culture take hold, coupled with the vanishing act of most international buyers who have part supported and underpinned the capital’s economy.
“That will take time to recover from, but a slight correction in prices for a city that has previously seen incredibly high values achieved is not all bad.
“It has created genuine opportunity for domestic buyers to upsize or choose an area or home which suits their needs better, with local families affording the space.
“Most buyers we see in London are local, with properties selling within a few weeks and often attracting multiple bids; in the past week we’ve had three ‘best and final’ scenarios.
“House price growth in London might be slow and steady, but transactions remain buoyant.
“Buyer demand shows no sign of abating and may well increase once international travel resumes and the overseas market can return.
“I have never seen a sellers’ market quite like it.
“The window of opportunity for sellers may be closing soon, however, as a wave of newly vaccinated homeowners – who feel more confident about listing their homes now the virus is under control – is set to join the house moving frenzy and level up the playing field.”