Some agents have reported the lowest ever stock of quality property for sale, as lower owner-occupation, buy-to-let investors not selling, and owners’ reluctance to ‘sell before you find’ contribute to a 4% fall in new seller numbers compared to same period in 2014.
Rightmove stated that decades of inadequate provision of homes to satisfy growth in demand are having an increasing effect, with a tight-stock market resulting in a shortage of quality property for sale to trade up to.
The Rightmove House Price Index reported a 31% increase in housing transactions in last two years in England and Wales, outstripping the 11% rise in number of properties coming to market in the same period.
Miles Shipside, Rightmove director and housing market analyst, comments:
“For the right property at the right price, demand is outstripping supply and leading to some further upwards price pressure. However there is a limit to what the majority are willing or can afford to pay, especially with the tighter lending criteria. In locations where there is a tight-stock market some different tactics are required for a successful move as competition gets fiercer for quality homes as demand increases.
“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% in 2003 to 65% in Rightmove's 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 for owner-occupier buyers in lower price sectors.
Shipside observes:
“More property could be effectively removed from the market when the buy-to-let sector sees a further boost from April, as agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in buy-to-let properties to secure a steady inflation-proof retirement income. Agents also report a reluctance amongst owner-occupiers to put their property up for sale, as they can see little suitable to buy, though in truth selling first (subject to contract) puts you in the best position to secure your next home. Given that this is the likely shape of the market now and in the future, home-owners need to get their tactics right for a successful tight-stock market move if those are the conditions in the area where they wish to buy.”
The Index shows that the average price of property coming to market rose by over £5,000 in February (up £5,729 or 2.1% from January), with all regions reporting uplifts in price.
Rightmove also recorded its busiest ever month for traffic and leads to agents, with visits to the site hitting over 100 million in January for the first time ever, and home-hunters looking through a record 1.5 billion pages of property. Email and phone enquiries by home-hunters to agents on Rightmove hit 4.3 million for the first time, equating to around 100 enquiries every minute.
Michael Herwald of Michael Herwald & Company in Manchester said:
“There has been a shift in the type of property first-time buyers have been purchasing in the past few years. Many of the buyers are older with a bigger deposit, which has enabled them to afford a mid-range property rather than a typical starter home, pushing up prices in this sector. This in turn has led to prices going down at the lower end of the market, especially flats. Stock is in short supply in some areas, especially because more people are staying put rather than trading up because they are worried that they will have problems with finance.”
Ken Hume of James Alexander in Norbury, South West London, added:
“There is a definite lack of stock at present, and while this is something that would usually improve as the year progresses, I think the upcoming election will slow things down in 2015. That said, there is still enough pent-up demand so the market will continue to move as long as property is priced correctly and not over-valued. We’ve seen increased interest in Norbury as a location for first-time buyers, especially as it’s within easy commuter distance to central London, and with the nearby investment such as the new Westfield coming to Croydon in the near future. People willing to move just that little bit further out could find a two bed flat for £250,000, well below the average of a first-time buyer property in the capital.”
