A chronic supply shortage in the UK is fueling a rise in UK property prices.

The UK housing stock has struggled to meet demand for many years, following a long period of low construction levels. New figures from Rightmove, though, highlight the increasing impact the imbalance is having upon the country's property prices, with values climbing at the start of the year, despite a slowdown in the capital.

London's property market has previously fuelled average national price growth, racing ahead of other regions. Now, though, two of its most expensive areas have reported falling house prices in January 2015, according to Rightmove, while the North of England is leading annual price growth; a stark reversal of the trend well documented in 2013 and 2014.

Rightmove says it has experienced its busiest January ever, with visits to the UK property portal hitting over 100 million in January. Combined with a lack of supply, the return of buyers to the market is pushing up prices across the country. 

Miles Shipside, Rightmove director and housing market analyst comments: "Many who are contemplating moving will have noticed a lack of suitable property for sale in their area, and may be hoping that it’s a temporary shortage. What they may not fully appreciate is that this is the new norm, and is the consequence of over 20 years of not enough homes being built to meet the burgeoning growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of the UK."

Lower owner-occupation levels, down from a peak of 71 per cent in 2003 to 65 per cent in the latest figures, mean that this shrinking sector has less ability to meet the housing needs of those looking to get onto or trade up and down the property ladder. This is exacerbated by the massive growth of the buy-to-let investor sector, up by 2.6 million homes since 1996.

Buy-to-let investors’ long-term investment strategy means they typically do not sell as frequently as owner-occupiers, resulting in reduced supply and choice.

This trend could become more severe in the near future, though, as pension reforms are predicted to give rise to the number of "silver landlords" using their equity to invest in the private rented sector and fund their retirement through buy-to-let.

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    Nick Marr

    I am an internet entrepreneur with a passion for driving big audiences and a love for real estate. I have had plenty of ups and downs which has given me the experience to help others launch their own businesses. I enjoy projects that save consumers time and money, challenge convention and add real value to peoples lives.