Some regional property markets are perilously close to running out of any stock to sell. That’s the news from property data and analytics company, TwentyEA.
It says that on average, there is now only 2.5 months’ worth of stock available across the UK, with the significant momentum seen in the residential property market throughout 2020 and 2021 – fuelled by the stamp duty holiday, the race for space and changed priorities - now coming to an end and a re-calibration to pre-pandemic levels anticipated for 2022.
The worst hit areas are the South West, Yorkshire & The Humber, Wales, and the East and West Midlands.
Excluding Inner London, the whole of England and Wales at a regional level has between 2.2 and 3.1 months of property stock left to sell - levels down by nearly half on historical norms.
TwentyEA believes that without a significant uplift in the volume of new instructions, the residential property market is at risk of a significant slowdown in 2022
“Such a scenario in so many of the UK’s property markets is, quite frankly, a little bit scary” says Katy Billany, executive director at TwentyEA. “It’s neither sustainable or healthy, and points to a dysfunctional housing market that remains too lopsided in terms of supply and demand.”
She adds: “If the current trends continue, could it be conceivable that the whole market starts to grind to a halt as there is nothing left to sell? This then has a knock-on effect for agents, conveyancers, surveyors and so many others.
“This is obviously the worst-case scenario, and we’re still some way off that even in the markets most at risk of a massive undersupply of new listings, but it’s not something that can be discounted completely. And we shouldn’t get complacent” she adds.
Sale stock is overrepresented by one-bed flats and also higher-priced properties, with little that has been on the market for very long. The situation appears particularly critical in the South West where, for instance, there are 10 times fewer properties for sale now than there were just two years ago.
Inside London, which until recently seemed to be bucking the trend of low stock somewhat, the situation is little better.
“For sale stock is at the fourth lowest monthly volume since our records began in 2008” Billany explains. “Four out of every five properties for sale in London are now flats and one in four properties will cost you £1million or more to buy.”
“At the start of 2022, there were only 75,000 properties for sale and two of the three months that were worse were in [the first] lockdown. There is a real concern that stock is drying up at an alarming rate.”
Billany says that while those sellers already on the market might benefit from a big supply/demand imbalance, in terms of being able to negotiate a higher asking price, it’s an unhealthy market position.
“To the casual observer, the market would appear to still be buoyant at the start of this year, but the major underlying issue of a chronic lack of supply shouldn’t be ignored and could have devastating consequences if it isn’t dealt with seriously – and sooner rather than later” Billany concludes.
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It is the same market conditions following the heated market of 1988. Everyone who was going to move, moved in that year to take advantage of MIRAS for two, which the Chancellor said would be phased out in the September. Then there was a period of little new inventory coming on, for years, apart from the movers in the hatched, matched and despatched verticals. And interest rates rose upwards, touching 15%. Sounds familiar, every market goes boom to bust, and Rishi like all Chancellors plays fast and loose with property taxation at his peril, now BoE interest rates have gone from 0.1% to 0.5% in a matter of weeks with talk of two more rises before year end. We have hyper house inflation, wage inflation, food price and utility inflation, all this will change the housing market, especially as one in two properties were bought last year by first time buyers, 406,000 of them, if they sit and wait, or just can not afford the deposits, the market will falter as they are the genesis of many chain transactions.
By 1991 we had seen record repossession numbers and a correction in house prices. Let's hope we can avoid a repeat scenario on repossessions!
If only there was a way to help agents get in touch with far more prospects than ever before… oh, there is!!
Yep, it's called Homesearch / Sprift / Spectre.
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