Data from Rightmore reveals property prices have reached a new high due to a lack of sellers and more people looking to buy.
Rightmove have said they had the busiest ever month in March since it launched in 2000 with 20% more volume year-on-year although new sellers are down 4% in the first quarter 2015 when compared to last year.
Data shows the average asking price is £286,133 in April up 1.6% on the previous month and £4,351 more than the previous record in June 2014.
Average London prices are now £594,585 having increased by £195,420 or 49% since the last election in May 2010. This compares to the rest of the UK with an increase of only £6,374 or 3.7% over the same period.
One advantage of rising house prices for London homeowners is remortgage buyers can now release capital to make home improvements.
For older remortgage buyers, the advantage of rising prices is the equity release mortgage buyer can access cash to improve your quality of life, for home and garden improvements or even buy a more expensive home.
Lack of new build homes
The director of Rightmove, Miles Shipside has said the record high housing demand and undersupply of new build homes has resulted in the all time high average property price ahead of the general election.
Mr Shipside has said the average price is 4.7% higher over a year as sellers delay placing their property on the market ahead of the election.
There are also more buy-to-let landlords making long-term investments helped by people at retirement using their pension funds as a deposit.
The rise in house prices makes it harder for first time buyers to afford to buy their homes and means they need a larger mortgage and higher income.
For buy-to-let landlords, they need to meet minimum rental incomes from lenders of 125% higher than the interest payments on larger mortgages. Higher property values also mean a higher 25% deposit is required.
The lack of suitable properties on the market at an affordable price for home movers means they will remain in their current home and saving for a larger deposit.
Right to Buy scheme make things worse
The government have announced they would expand the Right to Buy scheme allowing 1.3 million housing association tenants to buy their homes.
Critics say it will worsen the housing crisis in the short term and inflate prices.
Housing association tenants would be offered discounts of up to £102,700 in London and £77,000 in the rest of England.
Mr Shipside has said the failure of governments to meet new build home targets since the 1980s to match housing demand has been a major factor in upwards price pressure both in the property sales and private rented sectors.
The Conservatives could help to reverse this long term trend as the Right to Buy scheme would raise £1 billion creating 400,000 homes on brownfield sites.
What are your next steps?
Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, property value tracker chart and mortgage cost calculator.
At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
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