Housing Market Update: Demand remains solid as prices rise off the back of lack of supply.

The latest market reports from a range of property pundits and institutions suggest that the low level of new supply coming into the housing market is set to continue at least over the next few months. So let’s have a look at a couple of the latest housing market reviews.

The Halifax – The UK’s biggest mortgage lender

  • House prices in April eclipsed the record high set the month before as the market continued to maintain its recent momentum.
  • The average property is now worth £258,204, up 1.4% month on month and 8.2% annually, the highest annual growth rate in 5 years.
  • In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.
  • They consider that the stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the Government scheme. But they expect the influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out, but low stock levels, low-interest rates and high demand are likely to continue to underpin prices in the market.
  • The new Mortgage Guarantee Scheme may have eased deposit constraints for some prospective homebuyers who previously thought their first step on the housing ladder was a few years away.
  • Despite growing optimism in the long-term outlook of the UK economy, as the vaccination programme continues at pace, they remain cautious about the medium-term prospects of the housing market. They are of the expectation that with current levels of uncertainty and potential for higher unemployment as furlough support ends, house price growth will slow towards the end of the year.

The RICS April UK Residential Market Survey – Survey responses from members at the coal face of residential estate agency across the UK.

  • Survey results point to buyer demand remaining firm across the market, while the flow of properties being listed for sale has lost impetus of late.
  • RICS agents frequently highlighting the mismatch between supply and demand to be a critical factor in driving up house prices, with growth reportedly accelerating further across all parts of the UK.
  • 44% saw a further pick-up in buyer enquiries during April. This is virtually unchanged from a reading of +43% previously and therefore remains indicative of a solid uptick in buyer demand. What’s more, the new buyer enquiries series is positive, to a greater or lesser degree, across all areas of the UK.
  • Alongside this, newly agreed sales also rose over the month, evidenced by a net balance of +34% of respondents noting an increase (a slight easing on +48% last time).
  • Near term sales expectations remain comfortably positive at the national level.
  • For the twelve-month market view, contributing RICS members anticipate a cooling in sales growth further ahead, with the headline net balance standing at just +12%.
  • It is being consistently reported that the number of fresh listings arriving on the market is insufficient to match the current levels of demand. Indeed, the net balance for new instructions fell to -4% in the latest results, down from +21% previously.
  • Average agent stock levels have dropped in recent months, with the average number of properties on estate agents’ books now at just 40, having briefly stood at 46 back in December.
  • +75% of respondents noted an increase in prices during April and there is an expectation that this will be maintained over the coming three months. Further ahead, respondents also foresee upwards pressures on prices remaining firm at the twelve-month time horizon.

In a buoyant market with rising prices, why are there not more sellers coming to the market?

In life, when undecided, many of us will tend towards making a conservative decision or do nothing. This is often quite understandable. However, we know from the number of marketing appraisals we are conducting at present, that the seller’s fear of not finding a property they want to buy, and/or the fear that they will have no chance of being able to secure the home they do find before it’s gone, is holding back a significant supply of homes from coming to the market.

Many potential sellers are now getting increasingly frustrated that they are continuously missing out on an opportunity to move home. As a consequence, there are some tentative signs that more sellers are coming to realise that a do-nothing or live in hope view of moving is unlikely to achieve the success they really want. By being bold and taking a risk, managed by RB&Co down to a low level, there is more to gain than lose in taking their home to the market this spring/summer.

If you are thinking of selling this year, you will probably find the following recent news article of great assistance - The New Market Mantra - You have to be in it to win it, or at least be prepared!

In summary

There is no doubt that from the views expressed above, the market remains steadfastly buoyant and further prices rises are a reasonable expectation running of a very significant shortage of homes coming to the market, low-interest rates, a positive government-backed 95% mortgage guarantee scheme and an economy starting to bounce back, off the very successful vaccination scheme which is removing the shackles of consumer confidence and buying power, at a time when many are rethinking and changing their view as to what their home needs to provide for them in the future.

Are there voices of concern about the pace of house price growth in the market and the economy at the moment? Yes, as indicated by The Halifax and others and there is a view that this Autumn with the Stamp Duty concessions gone and other more negative economic issues to the fore, a slowdown might establish itself and the market adjust to a new equilibrium. We shall see?


Tony Wing DipSurv MRICS FNAEA

Sales Director


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