Asking prices increased by 3.2 per cent in the four weeks to February 6, research indicated today. The jump was the biggest rise for homes in England and Wales since April 2007, according to data from Rightmove.co.uk, the property website.
It pushed the average cost of a home up to £229,398 – 6.1 per cent higher than a year earlier – while asking prices in London climbed to a record high of £427,987.
However, Rightmove said that the economic fundamentals could not support further price increases of this magnitude.
Moreover, the company cautioned that in some cases the rise may have been caused by estate agents going along with sellers’ perceptions of what their property is worth in order to win business.
Miles Shipside, of Rightmove, said: “A price jump of over 3 per cent is comparable to the pre-credit crunch boom-times.
“Sellers are setting their sights higher, and some agents are going along with them in order to win scarce instructions.”
He added that the number of homes for sale was beginning to increase slowly, with 90,000 new listings added to Rightmove over the period.
This was nearly 20 per cent higher than in January 2009, although figures for that month were distorted by the introduction of a ban on marketing a property until the seller had a Home Information Pack.
But despite the improvement, new listings remain 37 per cent below levels seen for Januaries between 2005 and 2008.
Some areas also continue to have an acute supply shortage, with stock levels 45 per cent and 43 per cent lower in East Anglia and the South East respectively than between 2005 and 2008.
The Rightmove data is not the only indicator of possible recovery. The National Association of Estate Agents (NAEA) reported last week that its members sold an average of six properties in January, compared to five in December.
Gary Smith, of the NAEA, said: "Our figures suggest that concerns expressed about the prospects for the market in 2010 may prove unfounded.
"This appears to be confirmed by the increased level of sales, which given the awful weather conditions is quite amazing. The dwindling housing stock on our members' books reflected the increase in sales month on month, but this is a worrying trend that if continued will result in further upward pressure on prices.
"More encouragingly, the very important first time buyer section of the market now makes up almost one in four purchases. This confirms their confidence in the market as well as their ability to obtain attractive mortgage deals."
However, the Royal Institution of Chartered Surveyors reported that the number of sales recorded per surveying firm fell from 19 to 18 in the same month, while the sales-to-stock ratio, which it describes as "a measure of market slack and a lead indicator of future prices" fell for the second successive month.
Ian Perry, of RICS, said: "The cold snap in January clearly has a huge impact upon both supply and demand in the housing market with activity coming to a halt amidst the seasonal chaos. Activity and interest is likely to pick up in the coming months as the market experiences a spring bounce.
"House prices are likely to rise in the short term but if more supply continues to come on to the market, it is possible that the market will run out of steam in the latter part of the year."