Rightmove has recorded its busiest ever month for traffic and leads to agents.
This demand has contributed to new seller asking prices being up across all regions this month, by a national average of over £5,000 (+£5,729/+2.1%).
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.
Miles Shipside, Rightmove director, said: “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.”
Housing demand is at a record high with visits to Rightmove hitting over 100 million in January for the first time ever, and home-hunters looking through a record 1.5 billion pages of property. New record busiest ever days were set on Sunday 25 and Monday 26 January. 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.
Quality stock is in short supply in some locations, which is unsurprising given the structural under-supply of homes and the recovery from the economic downturn. The 31% increase in housing transactions in the last two years in England and Wales has outstripped the 11% rise in the number of new properties coming to market. Rightmove statistics show that the average available stock for sale per estate agency branch for the last two months (57 and 58 properties) has never been lower at the beginning of the year. New seller numbers this month are also 4% below those recorded in the same period in 2014.
Shipside said: “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 the latest figures3, 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 added: “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.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “House prices are once again on the rise and lending in 2015 is also likely to increase. Our prediction is that 2015 will be a strong year for the mortgage market overall with gross lending likely to reach around £225bn. Activity will be boosted as interest rates seem set to remain low for the foreseeable future and Stamp Duty changes should make buying a home seem more affordable.
“2015 has seen the housing and mortgage markets get off to a strong start, but we also need to be wary of continued house price increases. Unchecked price growth will exacerbate the housing crisis in the UK. It is essential that the government, housebuilders and the housing market more generally work together to build more houses.”
