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Lack of Supply Boosts House Prices as Buyers Return to the Market

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The UK is experiencing a continued rise in house prices as buyers flock to the market, boosted by the Help to Buy scheme.

The Royal Institution of Chartered Surveyors (RICS) released figures in April which showed that March was the 11th consecutive month which saw house prices rise across Britain, making it the longest period of growth since the financial crisis in 2008. The survey also showed that home sales have reached their highest level since February 2008, with the average estate agent selling 22.7 properties from January to March 2014.

This rise in home sales has been driven in part by the government’s Help to Buy scheme, launched late last year, which aims to help first time buyers and those on low incomes buy a home with only a 5% deposit. Uptake has been positive so far as buyers are encouraged by the helping hand. In turn the number of first time buyers has boosted those further along the property ladder and has spurred the whole market into a period of growth.

Supply and demand

However, the number of houses on the market hasn’t risen to the same extent and even the annual ‘Spring bloom’ of the property market hasn’t had the desired impact. The combination of rising demand and lack of supply has meant that in many areas there are more buyers than houses on sale, which is pushing up prices.

First time buyers hoping to secure a bargain for their home have been sadly disappointed, as competition among buyers has led to 19% of homes being sold for more than the asking price. According to RICS, outside London and the South East, price rises have been sharpest in the popular South West, as well as the East Midlands. One estate agent in Cheltenham said that houses in the Regency town are regularly going for more than the asking price and some properties are being snapped up the day they go on sale, after just a handful of viewings.

As the Help to Buy scheme continues to push first time buyers onto the property ladder, rising property prices are predicted to continue into the summer, meaning that 2014 could be a bumper year for estate agents.

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