Research from Savills and TwentyCi has shown that the number of homes for sale has fallen by a third from pre-pandemic levels. This, coupled with an increase in demand from buyers, has seen stock of supply on the market has fallen by over 45% in the same period.
Should demand for houses continue as the current rate, 65% of local authority areas would have no properties left to sell in three months or less.
Rightmove reported in March that there were more than twice as many buyers as sellers active in the market, which is the biggest mismatch between supply and demand ever recorded during the month. The speed of the market is further demonstrated by the fact that are there are more than one in five (22%) deals being agreed on Rightmove within the first week of being marketed. This is double the figure for the same period in the more normal market of 2019.
This has led to a significant supply-demand imbalance within the housing market. The number of homes for sale on the market has been 8% below average since March 2019, yet the number of sales has been 16% higher than average in the same period. Lucian Cook, head of UK residential research as Savills, said:
“That means, if we take a simple measure of the amount of stock on the market compared to the number of agreed sales, there were about 3.25 months of stock on the market in March compared to 5.95 months in March 2019 (a decrease of 45.4%).
And it’s this supply-demand imbalance which means we are continuing to see price growth reported despite a more challenging economic backdrop.”
There are just 23 homes for sale in the Outer Hebrides in Scotland, a drop of 72%. Barrow-in-Furness has seen its supply drop 57%, with neighbouring Lake District areas Allerdale and Copeland falling by 58% and 62%. Cher Richards, manager of Hunters in Barrow, attributed the fall in supply to second-home buyers, remote workers, and buy-to-let investors.
The lack of supply is forcing many of those that have sold their homes to turn to the rental market, with this group now accounting for 4.5% of renters, according to Hamptons – a rise of 0.6% since 2019. Aneisha Beveridge, head of research at Hamptons, said:
“While vendors are finding a buyer for their own home within days, they’re coming under pressure from their buyer to find their onward purchase.
As a result, they are increasingly turning to the rental market as a stop-gap to secure their sale and put themselves in a stronger position when they eventually come to buy.”
Naturally, the supply-demand imbalance is leading to soaring house prices. HM Land Registry’s monthly price index for February revealed average house prices have increased 0.5% since January 2022. Annually, an increase of 10.9% has been tracked, valuing the average property in the UK at £276,755.
