Sellers chance their arm with high price listings
The price of property coming to market has surged past last month’s record and jumped by an average of 1.8% (+£5,983) this month according to Rightmove’s October House Price Index.
With inflation threatening the continuing of record law interest rates, buyers are moving quickly to take advantage before potential rate rises; which could come quicker than anticipated according to a member of the Bank of England’s Monetary Policy Committee.
The figure represents the highest percentage monthly rise at this time of year since October 2015 with October 2021 being the first time since March 2007 that Rightmove has recorded a ‘full house’, with all market sectors and all regions of Great Britain having hit new record price highs in the same month (first time buyer, second stepper and top of the ladder).
This buoyancy continues to fuel optimism that conveyancers will stay busy for a while yet but there is a concern that the volume of properties being listed and prospective interest rate rises could constrain the market in the medium term.
The latest weekly snapshot shows that the number of new sellers coming to market is still marginally down on the same period in 2019, but only by 3.2% as opposed to 9.3% for the period as a whole. The number of sales being agreed was up by 15.2% in September compared to the same period in 2019 (a best ‘normal market’ comparison). This continuing imbalance, with demand outstripping supply could stall a recovery.
Tim Bannister, Rightmove’s Director of Property Data comments:
“Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board… This ‘full house’ is an extremely rare event, happening for the first time since March 2007.
“The stock shortages started after the first lockdown, and they look set to continue with the underlying housing market fundamentals remaining strong. The number of sales agreed continue to be strong despite the end of the stamp duty incentives.”
“Whilst available stock for sale is still close to record lows, there are signs that this has stopped falling and is stabilising this month, so fresh new choice is slowly growing”
The housebuilding industry, which has its own part to play in the recovery according to Boris Johnson’s recent conference speech, is struggling to keep pace with demand as Brexit and the “lingering impact of the pandemic” has resulted in materials and labour shortages.
The latest figures on construction output show private housebuilding remains nearly 4% down on pre-pandemic levels while public housebuilding has fallen almost 30%.
Commenting on the data from the Office for National Statistics, Andy Sommerville, Director at Search Acumen, says:
“The pain of supply issues across large swathes of the UK economy is nothing new to the housing market, where demand and supply have been disconnected for almost as long as memory serves. Strong levels of buyer demand continue to outstrip the sector’s capacity to keep up with building homes at a pace that can resolve the affordability crisis.”
“We’re seeing the emerging realities of Brexit combined with the lingering impacts of the pandemic at play. The shortage of raw materials and labour have derailed the daily lives of thousands of Brits, and threaten to put additional barriers in the way of homeownership ambitions as construction output dips and builders struggle to continue operations.”
“Housebuilders and homebuyers alike will be looking to government for more than just a rebrand of the Ministry for Housing, Communities and Local Government to address the issues of levelling up the property market. While planning reforms are being taken back to the drawing board, expectations will focus on the Budget in a fortnight’s time, but the strain on public finances may rule out the kind of show-stopping housing announcements that have landed in previous years.”