House prices recorded a slight increase in March, figures show
House prices have recorded their first monthly rise in more than a year and a half due to growing demand from buyers and a lack of homes on the market, a study has found.
The 0.2% increase in March follows a flat start to the year and is the first rise in 20 months, suggesting that prices will hold firm in the coming months, although the overall market is not yet "firing on all cylinders", said property analyst Hometrack.
The study said that the ending of a two-year stamp duty holiday for first-time buyers earlier this month may have helped to boost demand as buyers rushed to beat the deadline.
But London, which has strong interest from overseas buyers, saw prices jump by 0.5% in March, the largest monthly increase since April 2010, and the English capital is continuing to help keep average prices up nationally, Hometrack said.
Prices rose by 0.1% in East Anglia, the South East and the South West but they were flat in the East Midlands, the West Midlands and Yorkshire and Humberside. They fell by 0.1% in Wales and dropped by 0.2% in the North East and the North West.
Richard Donnell, director of research at Hometrack, said: "The divergence in the relative strength of the housing market in Northern and Southern England is set to remain. While the stamp duty holiday had a clear impact on the market, the effect of what is ultimately a short-term measure, will fade quickly in the coming months.
"The net result is that we expect prices to track sideways in the short term with the outlook for the second half of the year hinging on households' expectations for the economy and their incomes."
Hometrack's study, which surveys 1,500 estate agents across England and Wales about achievable selling prices, said that growth in demand over the last two months has helped to keep prices firm, with 93% of the asking price being achieved on average.
Meanwhile, cautious sellers have been reluctant to put their homes on the market, with estate agents reporting low levels of housing available to sell, particularly in the South, which has helped to keep prices up.
Mr Donnell said: "The reality is that the market is not firing on all cylinders nationally and against a backdrop of a low turnover environment, price growth remains sensitive to supply/demand changes."