UK housing stock hits record low as buyer demand wanes

Housing slowdown: New enquiries, sales levels and homes coming to the market all fell

The number of homes on estate agents’ books fell to a new record low last month as the number of new properties coming to the market and enquiries by house-hunters continued to dip.

As the property market struggles to shake off its winter torpor, estate agents said the average stock of homes for sale on their books dropped to a new record low of just under 42 last month – although the situation differs greatly across regions.

The Royal Institution of Chartered Surveyors said this was down to the lowest number of new enquiries since May 2017. The survey also suggests that price growth and activity are likely to remain subdued in the short term.

RICS said house price expectations were unchanged in February and looked set to remain the same in the coming months.

However, it also said that its long-term house price indicator had begun to creep upwards again and it expects prices to increase by 15 percent over the next five years.

New buyer enquiries fell for the 11th consecutive month, while sales levels and the flow of fresh properties coming on to the market also drifted lower.

Brian Murphy, head of lending for the Mortgage Advice Bureau, said the record low number of properties for sale was bound to have an impact on buyers.

‘It stands to reason that if fewer properties are on the market for sale, buyer choice is restricted. This means that those who are actively looking are likely to view fewer properties, hence the why we would see a reported reduction in new buyer enquiries,’ he added.

Regional trends: London and the South East are still seeing prices cool and activity dwindling
However, the report also found that regional trends seen earlier are continuing in the present – more buyers are looking for homes in Scotland, Yorkshire and the North, areas where prices are also on the rise, as opposed to London and the South East, where demand is waning and so are the prices.

Yorks and Humber, Wales, Northern Ireland, the North, and Scotland were all seeing more buoyant markets, with estate agents there seeing growing numbers of buyers over the past three months.

But London and the South East are still seeing prices cool and activity dwindling, according to the report.

Halifax yesterday revealed that UK house prices bounced back slightly in February after two months of monthly falls, although annual growth was the slowest in nearly five years.

The price of the average UK home rose by £891, or 0.4 percent, between January and February to £224,353, down slightly from November’s high of £226,408, according to Halifax.

RICS also asked estate agents what they thought was driving demand for new build properties. At a national level, the main driver was the lack of stock in the second-hand market, followed by the appeal of the Help to Buy scheme.

In London, however, estate agents pinned the blame mostly on the Government-backed loan scheme for an uptick in demand for new builds.

February saw the lowest number of new enquiries since May 2017

Simon Rubinsohn, RICS chief economist said this week’s Government’s consultation on housing put the onus on developers and planning departments to build more, but he argues that this may not be enough.

‘Significantly, the longer term national house price indicator has begun to creep upwards once again in recent months despite the current somewhat mixed climate and the private rent series also remains firm, in both cases pointing to increases of at least fifteen percent over the next five years.

‘Meanwhile, the divergent regional picture is becoming increasingly pronounced with key RICS indicators across huge swathes of the country still showing considerable resilience but data for London, the South East and East Anglia rather more subdued.’

Source Credit: This is Money