New figures from Hamptons International show that a lack of supply could be the biggest barrier to a sustained market recovery despite strong demand and a healthier mortgage market.
House sales in August were up by a third compared with last year, continuing the buoyant trend of the last five months. New buyers’ appetites are strong too. In August, the number of new applicants registering to buy was up by a quarter compared with last year and growth in demand has been up by around 30 per cent for the past five months.
A significant improvement in economic sentiment and confidence, combined with a healthier mortgage market and certainty that interest rates will remain low for some time to come have set a great background for a continued sustainable recovery in the housing market.
Marc Goldberg, Head of Residential Sales at Hamptons International, comments: “The market conditions are ideal for those looking to sell and the best we have seen for several years. There is an abundance of motivated buyers and fewer properties available which is allowing us to sell our properties swiftly and at high prices.”
Yet, on the other side, new instructions to sell have been disappointing, which threatens a smooth recovery. The rate of growth of new instructions has been slower than buyer registrations for some time, and the gap has been widening since the spring. In August instructions to sell were down by 14 per cent compared with last year.
The lack of supply is acute in London whereby there are 18 per cent fewer properties available for sale compared to last year. Year on year, new instructions fell by 12.5 per cent on average over the last three months, which combined with an average rise of 9 per cent in sales in the same period means the shortage issue is being compounded.
A similar story is unfolding across the South of the UK with our supply down by approximately 11 per cent compared to 2012. Add to this the number of new applicants increasing by 25 per cent and sales up by almost 40 per cent in the same period, and it looks like there could be increasing supply trouble ahead in the country.
“It’s not just a lack of supply of new homes that threatens a stable housing market. Without sellers of existing homes coming to market too, a smooth recovery is at risk, despite brighter economic conditions and improving mortgage credit conditions, states Fionnuala Earley, Research Director, Hamptons International.
“A lack of homes for sale combined with rising demand can only mean that prices will rise, and that risks choking off the fragile recovery we have been enjoying in the last few months”, continues Earley.
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