Buyers paying more with shortage of homes for sale

A SHORTAGE of homes on the market pushed house prices up 6.4pc last year while the number of transactions fell.

The average price of a home in England and Wales increased to £188,270 in the year to December 2015, according to Land Registry data.

Jeremy Leaf, the former chairman of the Royal Institution of Chartered Surveyors, said the decline in the number of transactions was “a worry”.

“If people aren’t able to move in and out of the market when they want to, there will be an inevitable knock-on effect for the rest of the economy,” he said. “With the high cost of moving, continued shortage of supply and affordability issues with tougher mortgage criteria, this situation looks unlikely to change any time soon.”

Houses in London hit an average price of £514,097, up 12.4pc from December 2014. The East and South East also saw big rises, as buyers snapped up homes in commutable distance.

Andrew Bridges, managing director of Stirling Ackroyd, a London estate agent, said: “There are two sides to this story. Rising property prices are lifting balance sheets in Barking faster than they are raising the bar in Richmond.

“Sellers across the capital are able to get excellent deals when they find the right buyer. But buyers are facing a difficult search. Future generations of young residents may never be able to afford the centre of the city again. So the city centre is moving. London needs to keep working for new homes.”

Outside London, the biggest annual increase was in the east of England, where prices grew by 10.6pc. The smallest change was in the North East, with average prices up 0.8pc to just below £100,000.

Separate government data released yesterday also shows that the average rent paid by tenants to private landlords grew 2.5pc last year, with a 3.9pc rise in London.