House asking prices ‘soar to highest level for three years’

The average asking price for a home rose to £238,874 in May, up 1.3 per cent on the previous month, and is now at its highest level since June 2008, according to property website Rightmove.

The rise in prices comes as the number of houses being put on the market fell 30 per cent to 20,000 a week over the bank holiday period as potential sellers were distracted by the Royal wedding and the warm weather.

This led some estate agents to agree to market homes at unrealistic prices as they competed for scarcer new listings, the report said.

Rightmove said the housing market was in “low transaction limbo” as record low interest rates of 0.5 per cent mean few homeowners are forced into selling their property and the lack of availability of mortgages means there are fewer buyers.

Continuing demand for good quality property in better areas and a lack of pressure to sell have enabled prices to defy downward pressure, according to the report.

But it warned that rate rises from the Bank of England could drive prices downwards.

The director of Rightmove, Miles Shipside, said: “The Bank of England’s decision to hold interest rates at unprecedented low levels has disrupted the traditional economic formula of an excess of supply over demand leading to lower prices.

“It has thrown some sellers a lifeline in their quest to hold onto the gains they made during the boom era, though the market has failed to build up a head of steam due to continuing red signals from mortgage lenders, and the normal spring momentum being diverted into a siding by the warm weather and the Royal wedding.”

He warned that sellers were in danger of missing out on the rapidly closing spring window