In recent months, Advantage has written about the challenges posed by staff and materials shortages within the construction sector. Today we’re looking at how a shortage of houses is beginning to affect the property market.
The property market is facing the worst shortage in fresh listings since 2015, according to property portal Zoopla.
Demand remains strong, but housing supply poses an issue
This is Money reported that while demand from potential buyers remains strong, stock levels are down more than 26 per cent compared to last year’s average – leaving prospective buyers battling it out for the most in-demand properties.
Total listings are also 33 per cent lower than they were this time in 2018 and 2019. One in 20 UK homes changed hands over the past year, compared to one in 25 two years ago.
Supply problems are worst for homes priced up to £350,000, which Zoopla said was ‘reflective of where average affordability lies’ for buyers.
‘It’s the supply of three and four bed family homes that is most stretched,’ the report added.
‘The narrowing in choice of homes to buy, especially for family houses, means the market will start to slow naturally during the rest of the year and into next, as buyers wait for more stock to become available.
‘While we anticipate a strong start to 2022 in line with seasonal trends, there will be a slow reparation of stock throughout the first half of the year.’
The average time taken between listing and an agreed sale is now 26 days, down from 49 days in 2019.
Value of houses rises more swiftly than flats
While the average flat in the UK has increased in value by 1.2 per cent in the past year, the average house has increased by 7.6 per cent over the same period, according to the data.
Increased activity among first-time buyers and investors is also absorbing stock, while failing to replenish it.
This huge ‘mismatch between supply and demand’ is triggering property price hikes in many parts of the country, according to Zoopla.
Year-on-year, property prices grew by 6 per cent in July, which was slightly lower than the 6.3 per cent growth rate seen in the year to June. The average value of a home across the UK is now £234,000.
The headline rate of growth is expected to ‘moderate’ slightly down to around 4 or 5 per cent by the end of the year, Zoopla said.
Zoopla pointed out that the supply of newly-built homes, which slowed temporarily due to the hiatus in the construction industry during the first lockdown, is also still down 11 per cent in England.
Advantage’s view: A combination of a shortage of supply and the end of the Stamp Duty holiday has inevitably slowed the recent housing boom. However, with demand remaining high, Zoopla is not alone in predicting a strong start to 2022 for the UK housing market. Also, the under-supply of new housing stock will ensure that the pressure remains on for the government to make more progress towards meeting its affordable housebuilding targets.
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