Supply drought not enough to prevent price falls, warn industry experts

Three separate surveys appear to suggest that even a long-term shortage of homes on sale is not enough to stop a short-term drop in prices.

The supply of properties for sale has slumped to alarmingly low levels, according to website Home: i claims the current figures suggest a 51 per cent fall in the number of properties for sale in England and Wales over the last eight years, from 855,585 in April 2008 to just 415,038 in April 2016.
 
In addition, there was a 12 per cent decrease in the total stock of property for sale in April this year compared to the same month last year. 

Home’s regional breakdown of the figures shows that every mainland UK region has seen a marked downturn in the number of new properties coming on to the market when comparing April 2008 with April 2016.

In the East Midlands, South West and West Midlands, there was also a dip in supply of new properties between April 2016 and the same month last year. 

In the North East and North West there was no change at all in supply when comparing April 2015 and April 2016’s figures.

Greater London saw a sharp spike of 22 per cent in the supply of new listings when comparing April 2015 and April 2016’s figures but this is still 53 per cent down on April 2008. 

Home says that all this shows that despite the recent surge in new listings in the capital “its overheated market is still in dire need of more properties.”

However, this apparent shortage of homes - at least in recent historic terms - is not enough to stop a price fall according to the Royal Institution of Chartered Surveyors.

Surveyors expecting prices to drop outnumbered those expecting prices to rise by a majority of 10 per cent - suggesting they expect the first fall since late 2009.

The causes of the likely drop are uncertainty over the result of the EU referendum and lingering effects of stamp duty changes. 

"What we are looking at is a short term drop caused by the uncertainty resulting from the forthcoming EU referendum, coupled by a slow-down following the rush to get into the market ahead of the tax change on the purchase of investment properties," said Simon Rubinsohn, RICS chief economist.

"Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market.”

Meanwhile the latest survey from LSL Property Services shows the market slipping ahead of the June 23 vote - average prices for England and Wales dipped 0.4 per cent in May.

“The year-on-year growth in house prices has also slowed, decelerating to 6.8 per cent in May, from 7.7 per cent in April. With the Chancellor predicting that a Brexit from the EU would reduce property values by at least 10 per cent, many buyers are holding off until after the uncertainly surrounding the referendum has been resolved” says a LSL spokesman.