The UK property market is facing its greatest stock shortage since 2015, according to Zoopla’s latest monthly House Price Index. The firm says that after a year of steep demand and a 40% increase in sales transactions in the 12 months to June, compared to the 12 months previously, the UK property market is grappling with an acute stock shortage. While buyer demand remains strong, up 21% compared to the 2020 average, stock levels are down 26% compared to the 2020 average. Looking back further, total stock is down 33% compared to this time in the more normal markets of 2018 and 2019.
Zoopla stated: ‘Competition amongst buyers has been intensifying throughout the second half of 2020 and 2021, spurring the market to move faster. The average time to sell (the time taken between listing and sale agreed), is now running at 26 days, down from 49 days in 2019. Sales agreed are running at 21% above levels seen in the summer of 2018/19, ultimately eroding supply, with one in 20 homes changing hands over the past year, compared to one in 25 homes in the 12 months to June 2019.
‘Supply constraints are pronounced for homes priced up to £350,000 - reflective of where average affordability lies for UK home movers. Meanwhile, as the pandemic and its lockdowns continue to shape the ongoing demand for more space, it’s the supply of three and four bed family homes that is most stretched. Demand for family homes is clear in the price growth statistics; while the average flat in the UK has increased in value by 1.2% in the past 12 months, the average house has increased by 7.6% over the same period.’
Supply constraints to impact the market next year also
Housing stock has been eroded by high levels of activity, and new listings running around 5% below average since the start of the year. In addition, increased activity amongst first-time buyers and investors is absorbing stock while failing to replenish it.
First-time buyers have been increasingly active in 2021, supported by lenders who have reintroduced products that facilitate higher LTV mortgages. Momentum for this demographic has further to run after some were squeezed out of the market last summer, and also because of the stamp duty relief they will continue to enjoy even after the end of September.