Supply of property continues to increase in key regions of London
As prices rise across the board due to increased market optimism, the number of individuals seeking to sell their home grows, according to research from Home.co.uk.
Across the regions, supply has particularly increased; on a year-on-year basis by 11%. The increase has been most prominent in particular regions, perhaps most notably in the East of England (+30%), the South East (+23%) and Greater London (+19%).
From 2011 until the end of 2015, supply fell in these particular regions, with the drop meaning prices were pushed to record highs. This trend has now reversed, resulting in the current supply surge which may potentially overpower demand.
Commenting on the increasing supply in these areas was Doug Shepherd. The Director at Home.co.uk expressed concern upon the impact oversupply may have on surrounding regions:
“London was the first to show an uptick in properties entering the market and the total stock for sale in the region has risen by around 24%. Oversupply is clearly a danger here and in the neighbouring regions, which would trigger a rapid downward spiral in prices. Foreign investment was the saviour of the London market following the onset of the financial crisis, but Euroland or dollar-based investors will not be tempted back until sterling stabilises and that may take some considerable time.”
Price weakness has already been witnessed due to growing numbers of new instructions in London – a fall of 2% in the last six months – a trend which is set to filter out to other regions.
Observing supply levels on a broader UK level, the regional figures of supply form a mixed picture. In the West Midlands, supply continues to reduce, with change in Wales, Scotland and East Midlands remaining minimal. The more dramatic trends that have been witnessed in London, the East and South East of England are yet to be observed across other regions. The regional increases across these three areas have thus far not affected the total stock of property currently on the market – which has risen by just 1% – at a material level.
Although property prices have risen throughout all areas of the UK, the increase is more subdued in some areas. This is the case for the North West, North East and Yorkshire which showed minimal increases of around 0.2%. This further indicates the property market’s ability to fluctuate with marginal price recovery in the North and long marketing times. This year however, a significant rise of 4.2% in price performance has been witnessed in the North West; the best post-crisis in the North itself.
Despite rising supply in the East of England, prices continue to rise at a dramatic pace of 11.5% over the last year. By a considerable degree, this is UK’s best performing region.
Remaining consistent in its home value performance was the West Midlands, rising by 6.5%. This region’s property supply is uniquely still contracting and it is predicted that price levels will remain robust.
The fragility of the current market is evidenced by the cutting of home prices whilst on the market, which has risen to a 3-year high.