Thu, 13 Jun 13
The UK’s supply of property for sale dropped 8 per cent in May 2013 compared to May 2012.
Combined with rising demand, the low levels of housing stock pushed up asking prices in the UK up by 0.6 per cent in May 2013 to £240,238, 3.6 per cent higher than last year.
Indeed, the mix adjusted average asking price has now grown for 19 months in a row in both England and Wales, with Greater London, the South East and the South West recording the biggest rises of 7.9 per cent, 4.4 per cent and 3.9 per cent respectively.
On the surface, an annual price rise of 3.6% appears to be a reasonably strong performance, although it is important to note that virtually all of this growth has been achieved in 2013 and predominantly in London and the South, explains the report.
Looking at price trends around the country, the recovery is only clearly apparent in the South. Average prices across the northern regions of England are essentially static (slightly negative in the case of the North West) in stark contrast with the South which has recorded monthly increases of 0.8%.
Active buyers are chasing ever fewer properties as supply continues to fall. The volume of new stock on the market has now fallen for six consecutive months and, in May 2013, the number of properties was down 8% on May 2012. In addition, a reduction in the typical marketing time for unsold property (currently 104 days, five days less than June last year) has further reduced the total volume of on-market properties, which is down 14% in the last 12 months.
While average house prices continue to recover, vendors seemingly remain cautious about entering the market in any significant volume. For many, bricks and mortar constitute one of the safest investments in today’s uncertain economic climate. The flow of properties into the sales market continues to fall and this has helped to push the total on-market stock is down by 14% vs. June 2012. As buyer confidence gradually improves in line with mortgage availability and economic growth, this restriction in supply will only intensify the competition for property. This is reflected in falling marketing times in areas of the country where demand is higher, and implies that the current stock is beginning to flow through the market at a faster pace.
“The current trends are clearly showing an overall market shift in favour of vendors,” comments Doug Shephard, Director of Home.co.uk. “Prices continue to recover and restricted supply is encouraging more competition between buyers. However, many potential vendors are still reluctant to sell. Relatively cheap mortgages, strong demand in the rental sector and rising values make property an attractive and secure investment, especially in high demand areas which attract relatively high rents and benefit from appreciating capital values. Until other investment options (shares, bonds, commodities etc.) can offer a premium over and above the yields available in property, the supply shortage will continue, and perhaps worsen.
“As always, the relative strengths of supply and demand will determine the rate of recovery of each local market. Given the current North-South divide, it is already obvious that the turnaround of each area of the UK will differ considerably. London, at one extreme, appears to be operating as a separate entity, bloated by BoE stimulus money and foreign buyers, seemingly immune to the overall economic conditions affecting the rest of the UK. In contrast, Wales and the North East continue to struggle with subdued price performance and typical marketing times that are over 60% longer than the national average.”
Indeed, the mix adjusted average asking price has now grown for 19 months in a row in both England and Wales, with Greater London, the South East and the South West recording the biggest rises of 7.9 per cent, 4.4 per cent and 3.9 per cent respectively.
On the surface, an annual price rise of 3.6% appears to be a reasonably strong performance, although it is important to note that virtually all of this growth has been achieved in 2013 and predominantly in London and the South, explains the report.
Looking at price trends around the country, the recovery is only clearly apparent in the South. Average prices across the northern regions of England are essentially static (slightly negative in the case of the North West) in stark contrast with the South which has recorded monthly increases of 0.8%.
Active buyers are chasing ever fewer properties as supply continues to fall. The volume of new stock on the market has now fallen for six consecutive months and, in May 2013, the number of properties was down 8% on May 2012. In addition, a reduction in the typical marketing time for unsold property (currently 104 days, five days less than June last year) has further reduced the total volume of on-market properties, which is down 14% in the last 12 months.
While average house prices continue to recover, vendors seemingly remain cautious about entering the market in any significant volume. For many, bricks and mortar constitute one of the safest investments in today’s uncertain economic climate. The flow of properties into the sales market continues to fall and this has helped to push the total on-market stock is down by 14% vs. June 2012. As buyer confidence gradually improves in line with mortgage availability and economic growth, this restriction in supply will only intensify the competition for property. This is reflected in falling marketing times in areas of the country where demand is higher, and implies that the current stock is beginning to flow through the market at a faster pace.
“The current trends are clearly showing an overall market shift in favour of vendors,” comments Doug Shephard, Director of Home.co.uk. “Prices continue to recover and restricted supply is encouraging more competition between buyers. However, many potential vendors are still reluctant to sell. Relatively cheap mortgages, strong demand in the rental sector and rising values make property an attractive and secure investment, especially in high demand areas which attract relatively high rents and benefit from appreciating capital values. Until other investment options (shares, bonds, commodities etc.) can offer a premium over and above the yields available in property, the supply shortage will continue, and perhaps worsen.
“As always, the relative strengths of supply and demand will determine the rate of recovery of each local market. Given the current North-South divide, it is already obvious that the turnaround of each area of the UK will differ considerably. London, at one extreme, appears to be operating as a separate entity, bloated by BoE stimulus money and foreign buyers, seemingly immune to the overall economic conditions affecting the rest of the UK. In contrast, Wales and the North East continue to struggle with subdued price performance and typical marketing times that are over 60% longer than the national average.”
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