The supply of UK property for sale has reached a “crisis point”, according to Home.co.uk.
The property search engine’s latest report warns that the amount of property for sale has “slumped to alarmingly low levels” this spring, with 415,038 homes for sale in April 2016 – down 51 per cent from eight years ago. On a year-on-year basis, there has been a 12 per cent decrease in the total stock of property for sale.
A regional breakdown of the figures shows that every mainland UK region has seen a marked downturn in the number of new properties coming on to the market when comparing April 2008 with April 2016.
“This chronic shortage of available housing stock for sale has been a key factor in the continued rise in property prices in recent years,” comments the site.
“Home.co.uk’s latest Asking Price Index revealed there were price rises in all parts of the UK in May, with the mix-adjusted average asking price for England and Wales jumping 0.8 per cent since April.”
UK home sales spring forward – but for how long?
14th April 2016
Home sales have sprung forward at the start of 2016, driven by the stamp duty deadline.
According to the latest LSL Property Services / Acadata report, sales surged 30 per cent in March, resulting in 80,000 transactions completed – the strongest March for activity since 2007.
Richard Sexton, director at e.surv chartered surveyors comments: “This Spring, with a frantic flurry of activity, the housing market has come to life. As a result of the impending stamp duty hike, this has been the strongest March for home sales in nine years. The surge was widespread across England and Wales… This goes beyond any normal seasonality, with second-home and buy-to-let investors rushing to beat a bigger tax bill.”
The surge in demand also helped push house prices to a record high in March, with the value of a typical home rising 6.9 per cent year-on-year to £291,650.
“This is an acceleration from the previous month’s 6.5 per cent annual growth and represents the largest year-on-year growth since February 2015,” comments Sexton. “The green shoots are resplendent right across the country, with 73% of local authorities in England and Wales experiencing a monthly upswing in home values – the highest proportion of areas seeing positive property price rises since July 2014. This will be welcome news for homeowners, who now have a fantastic opportunity in the current sellers’ market. The pervasive shortage of homes on the market is still driving up values, as buyers have to compete for each available property. If they are going to make it easier to get a foot on the property ladder, the Government will have to double-down on its help to first-time buyers, or let up on landlords.”
Professionals, though, question how long this momentum will last, with the buy-to-let rush now giving way to uncertainty surrounding the stamp duty changes, the EU referendum and the devolved elections.
These factors have been most strongly felt in central London, where 38 per cent more respondents to the Royal Institution of Chartered Surveyors’ latest survey said they expected to see house prices fall over the next three months.
Across the UK, while expectations around the number of new house sales peaked following the Chancellor’s Autumn Statement, this trend has reversed with 2 per cent more respondents expecting to see the number of sales fall rather than rise over the coming months. Confidence around house price inflation has also dampened with 17 per cent of respondents (net balance) expecting to see prices rise over the next three months, compared to 44 per cent in December.
However, the longer-term outlook suggests that prices will still be expected to rise by more than 4 per cent each year for the next five years across England and Wales, with prices in London projected to grow by a broadly similar amount rising by 3 per cent each year over the same period.
Survey respondents cited Stamp Duty changes, the EU referendum and the forthcoming elections as the main catalysts driving the market slow down.
“As expected, the buy-to-let rush has now run its course and, as a natural result, the market is starting to slow,” comments Simon Rubinsohn, RICS Chief Economist, coments.
“But there are other significant factors that are currently weakening short-term confidence in the UK property market. Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception. Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular.”
It may also just be affordability that proves the underlying factor in the market’s future, however, adds Rubinsohn.
“The imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25 per cent over the next five years.”Google+