Roadmap out of Covid will help housing stock shortage
The housing market seems to be a hot topic of conversation at the moment. The amount of activity the market has enjoyed since it’s re-opening in May 2020 following the first lockdown, has possibly exceeded many people’s expectations.
With stimulus from the government, such as the stamp duty land tax holiday, and subsequent extension, the introduction of 95% mortgages backed by the institution, and the fact that people have been cooped up in the same four walls for over a year and have been able to save due to limited expenditure, it’s not hard to see the appeal of wanting to move home.
However, with this mini-housing boom, there has been calls for concern that the industry will soon run out of properties to sell as demand is set to vastly outstrip supply. We’re hearing more and more of properties being subject to a bidding war as people continue to fight for the home of their dreams.
According to data release by TwentyCi, estate agency residential listings have dropped by 50% compared to usual levels, leaving an average of two months’ worth of stock on the books.
Their data also revealed a 33% increase in Sales Agreed and 55% increase in the number of Exchanges, further adding to the stock woe.
Colin Bradshaw, Chief Customer Officer, TwentyCi, said:
“The lack of properties coming to the market has the potential to jeopardise or temporarily cause a slow-down in the market. Keeping the levels of residential stock to purchase sufficient to satisfy the continued surge in buyer demand, on the back of government stimuli and pandemic induced work and lifestyle changes, is critical to help maintain the economic recover. Not least due to the value of homemovers to the economy. Homemovers contribute £12bn to the economy each year delivering more than three percent GDP. Our direct experience of the categories closely aligned to a home move means this equates to the purchase of over 100,000 beds, 160,000 sofas and nearly 70,000 dining tables. Clearly, these consumers are an incredibly valuable group of customers for many organisations across a wide range of sectors – from retail and home improvements through to financial and insurance companies.”
With this in mind Today’s Conveyancer reached out to a number of people in the property industry to see what their views were on the ‘stock shortage’ that was seemingly on everyone’s lips.
Karl Knipe, Director of Kings Group LLP and Metropolis Surveying Services LLP, commented:
“I don’t think that the lack of housing stock is a problem. There is a natural progression for people to move home, and as people become more confident with the vaccine roll out and as restrictions continue to ease, more properties will come to the market. We have to remember, that some people still aren’t comfortable letting strangers walk around their home when they can’t spend time with their family indoors.
“Two other avenues that housing stock comes to the market is via the courts, through eviction and probate processes. There are currently backlogs in these at the moment, but once At the moment there are a lot of properties held up in various processes, such as the repossession process and the probate process, but once these processes begin to move again, we will see another set of property stock coming to the market.
“I’m optimistic that as we continue to work through the government’s roadmap out of the pandemic, the property supply will loosen up in the summer, meaning the next 18 months will have a further positive effect on the industry.”
David Jabbari, CEO of Muve, said:
“There is no doubt that an analysis of the market data shows that nearly 70% of all properties listed are sold subject to contract, so demand is dangerously outstripping supply. This is why we are seeing the surge in prices and the massive anxiety of buyers to get their transactions done before sellers raise prices or move to another buyer. It is a perfect storm because this pressure is coming just as the conveyancing market goes into even deeper logjam, with transaction numbers nearly 50% higher than the same period last year. We expect it to be a fraught market until the end of Q3 when all the SDLT changes finish.”
Matthew Irving, Operations Manager at Team Property Services, said:
“We deal with over 100 independent estate agencies on a daily basis and all are saying that demand is outstripping supply, certainly in the South of England anyway. The stamp duty holiday encouraged all sellers who may have been thinking of moving home to accelerate their plans and although this has now been extended those intending to move are pretty much well on their way so the extension is not encouraging a new tranche of movers to the same extent.”
Rob Houghton, CEO of Reallmoving, commented:
“Demand is certainly outstripping supply at the moment, but there are signs that sellers are already capitalising on this by preparing to put their homes on the market this spring. The latest RICS market survey showed surveyors reporting a 29% uptick in appraisals in March, which will translate to new instructions hitting the market over the next few weeks. With the stamp duty holiday tapered into the autumn, lockdown restrictions easing and buyers flooding the market, many of whom have made substantial cash savings during lockdown, I’m optimistic we will see a strong performance over the next few months.”
In the short-term the amount of property stock on the books is potentially going to hit low levels, but as we can see from the people we’ve spoken to, there is optimism as the UK continues to navigate the road map out of the coronavirus pandemic.