The property market is going through a “staggeringly” high stage of development, according to the latest Property Price Report from the Association of British Insurers.
The new report, released on Monday, also found the UK’s housing market is “unprecedentedly fragile” with more than 2,000 new homes available every day.
“The housing market continues to be volatile and has remained vulnerable to sudden events such as the Brexit vote, a fall in house prices or a change in economic conditions,” said the report, which was prepared by a group of industry and government bodies.
In total, there were 4,039 new housing properties available for sale last week, according the report.
Of those, 3,890 were new dwellings.
But while the number of new homes being built was “not particularly exceptional”, the report said the average price of a new dwelling rose by 8.4 per cent over the last 12 months.
That compares to a fall of just 1.5 per cent in the market for new houses.
At the same time, the average value of a house in the UK is now £10.9 million, up from £8.8 million in 2016, the report found.
According to the survey, the number one reason buyers turned to renting is the prospect of higher property taxes.
There were 1,543 fewer houses for rent in June 2017 than in May, but that is a drop of more than half, according an industry association.
More than 2.6 million homes were under construction in the 12 months to June 2017, with just over half of them being luxury developments.
Overall, 1.3 million properties were listed in the capital, according TOO, which is the most since records began in the early 2000s.
Some of those properties are in the middle of development as developers seek to get around rules governing construction of homes.
However, the majority of new construction is being concentrated in the north of England, where the housing market has been particularly strong over the past decade.
Across the country, the most popular type of development is in the south of England.
For example, the London borough of Tower Hamlets is the second-most popular development in England, with more new homes for sale there than any other borough, according ToO.
A total of 2,818 homes were listed as “unsold” in London last year, according figures from Nationwide.
This is down by nearly 40 per cent on the previous year.
While the number for the capital was up by 9.5% from May to June, it is still far below the 11.2 per cent peak seen in 2011.
Despite the sharp increase in demand, demand is likely to be restrained by a number of factors, such as a weak pound and a weaker labour market.
Many of the biggest buyers are moving into new homes, with the biggest surge in activity coming from the north-east, where home prices are soaring at a record rate.