Property in short supply as spring market gets underway

Tom Bill, head of UK residential research at Knight Frank

You don’t need to spend long on a property portal to realise that supply is tight in the UK housing market.

A recent search of my south London postcode produced a list of properties that were either already sold, under offer, mis-priced or best described as ‘unusual’. It wasn’t even a long list.

While buyers have been registering in record numbers in recent months sellers have hesitated, which reflects the mixed national mood.

People are making plans but there is a whiff of uncertainty as we move beyond the pandemic, with the conflict in Ukraine intensifying the cost-of-living squeeze.

Last week, the Halifax reported annual UK growth of 11%, which included a monthly rise of 1.4%, the largest in six months. The Nationwide recorded growth of 14.3% over the same period.

Based on the property portal evidence, it doesn’t feel like those numbers are about to go into freefall, despite the fact inflation and mortgage rates are rising.

In many cases, low supply has been the result of a vicious circle, with prospective sellers holding off because they are unable to find anywhere to move into themselves.

The end of the stamp duty holiday also played its part in deterring new sales instructions, as we explored here.

So, what is supply like as the spring selling seasons gets underway?

“Low but building” is the best summary, a process happening more quickly in some areas than others.

Indeed, the number of new sales instructions across the UK in March was only 0.5% below the five-year average for the same month, which is encouraging. However, for context, the number of new prospective buyers registering was 56% higher.

We have previously explained how the impact of the pandemic on the property market would linger for longer, which is holding true as Easter approaches. Spring doesn’t feel like the moment when normality returns, unless it happens very late.

For sellers, it presents an irony.

Listing your property now is potentially beneficial while there is so much upwards pressure on prices, as James Cleland, head of Knight Frank’s country business, recently pointed out.

Waiting implies the risk of headwinds as rates and inflation move higher.

Irrespective of the timing, it is unlikely that prices will fall as the market self-corrects.

Rates remain historically low and many households have accumulated large quantities of wealth during the pandemic. Neither is there any discernible weakness in the labour market or banking system.

For now, to anticipate that all-important moment when prices begin to moderate, keep checking the property portals.

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