the mismatch between supply and demand persists
Demand in the UK property market remains at high levels, while supply is still low. This puts upward pressure on house prices and highlights the importance of advancing more new construction.
In the UK housing market, the number of properties for sale has fallen to its lowest level in more than six years, according to Zoopla. In the past year alone, one in 20 households has changed owners. This whirlwind of activity was motivated by the stamp duty holidays and the space race.
Currently, the number of dwellings put on the market still does not reconstitute those that are sold. This had led to the worst stock shortage since 2015, when Zoopla started tracking this. At the same time, there is a frenzy of buyers going on.
Gráinne Gilmore, head of research at Zoopla, said: “The post-pandemic ‘home reassessment’, with households deciding to change how and where they live, has yet to continue, especially as office workers receive confirmation of work flexibility, allowing more leeway to live further away from the office.
“However, the lack of supply, especially for family homes, means the market will naturally start to slow for the rest of this year and into the next year as buyers wait for more inventory to become available before moving. “
What’s going on with house prices?
The mismatch between supply and demand continues to exert upward pressure on house prices. The average UK house price has risen 6% over the past year to the end of July, according to Zoopla’s latest house price index. This pushed the average house price to £ 234,000.
Regions where affordability is less strained experience the greatest growth in house prices. Wales, Northern Ireland and North West England lead with respective increases of 9.4%, 9.0% and 7.9%.
A similar pattern is also observed at the city level. For example, Liverpool is home to an average house price of £ 136,721. And the city of Merseyside leads the growth in house prices with a 9.4% increase in the past year. House prices in Manchester and Belfast rose 7.7% and 7.5% respectively over the same period. On the other hand, London only experienced 2.5% growth.
The importance of new
Demand from potential buyers remains at high levels. The number of people looking to buy a property is 20.5% higher than the 2020 average.
The activity of real estate investors and first-time buyers in particular has increased. These buyers are considered net new demand, with the vast majority having no property to sell. This puts additional pressure on the gap between supply and demand.
With the housing shortage, the UK housing construction industry can play an important role. First-time buyers can buy new properties through the Purchase Assistance program. And more and more investors are seeing the benefits of investing in new construction, especially those in rental construction developments.
What could happen in the future?
Supply is expected to remain low for much of next year. This will likely cause the UK property market to slow down and house prices could fall. Once the impact of the stamp duty holiday wears off and other government stimulus measures are withdrawn, housing stock levels will begin to gradually recover.
Gráinne Gilmore comments: “As 2022 approaches, there will be a good start to the year in line with seasonal trends, but after that, a return to more usual levels of activity among first-time buyers, the effect of the end of the stamp duty holiday and some buyers waiting for more stock to become available will cause inventory levels to slowly repair in the first half of the year. “