If you are looking to buy a house you will need to act fast, as the UK property market faces a shortage of properties as demand for homes continues to rise.
UK house prices are continuing to rise, with the most recent house price data suggesting that, despite early indications of a property market slow down at the very end of 2020, demand was stronger than ever throughout January and early February 2021, with house prices rising 0.5 percent month-on-month. The reason for this odd-defying trend is that the UK property market is facing supply shortages amidst unprecedented demand.
Despite all predictions, the cliff-edge housing market fall as the stamp duty deadline looms closer has failed to materialise. According to Rightmove, ‘all indicators of buyer activity being ahead of the same period last year’ amid ‘a shortage of supply’.
Tim Bannister, Rightmove’s Director of Property Data, explains that the latest lockdown has led to yet another surge in interest in moving as new listings continue to decline. ‘As well as the current lockdown motivating buyer demand again, the restrictions have also been a factor in limiting new supply, leading to some modest upwards price pressure.’
Is there a housing shortage in the UK?
There is a remarkable consensus between property experts like Bannister and leading estate agents that there are increasing issues with the supply of new housing. Michelle Gallagher, Sales Director at JDG Estate Agents in Lancaster, calls the lack of supply ‘a problem’ that is leading to ‘inflated asking prices on some properties’.
‘There is no doubt many home sellers have delayed moving plans due to covid, lockdown 3.0, furlough and home-schooling,’ she explains. Life under lockdown is simply proving too demanding to also be dealing with the sale of a home for many families.
Richard Freshwater, Director at Cheffins in Cambridge, offers a slightly different take on what’s causing the reduced supply of housing. He believes that the main culprit is the ongoing difficulties in carrying out property evaluations, which, as he points out, are down ‘around 20 percent in comparison to January 2020’.
‘This has created a lack of new available stock in the market, particularly in the higher price brackets,’ he says. ‘Which we forecast will bring with it a rise in property values.’
It is then entirely possible that the higher-priced property market hasn’t even reached its peak pandemic growth yet. ‘Until the demand vs supply equation is balanced out, competitive bidding is likely to increase causing inflated property values,’ he adds, not foreseeing this happening ‘until the vaccine rollout is in its later stages.’
It is clear that for buyers, 2021 is set to be a waiting game, especially as the significance of the stamp duty holiday has vastly diminished and just over a month remains before the deadline.
If you are able to wait until the UK is further along with its vaccination goals, you may well see seller confidence return, with a greater number of sale listings resulting in a less competitive (and overinflated) market.