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Lack of Supply Beginning to Show in Property Market

By +Eric Jafari

Lack of Housing SupplyThe UK's lack of housing supply is starting to show in the property market, according to one expert. The Home.co.uk Asking Price Index revealed that the supply of new property being placed on the market is down 7.6 per cent year-on-year.

This means buyers have fewer properties to choose from and house prices are being pushed higher and higher - bad news for those trying to get onto the real estate ladder for the first time.

A nationwide property price rise of 0.8 per cent was noted in March, while values in greater London increased by 1.3 per cent. Across the country, this is the third consecutive month of increases. In the capital, March growth mean year-on-year gains stand at 7.3 per cent. However, only 117,000 new sales entered the market. What's more, price gains had significant variations across the country, with growth in the north-east standing at just 0.1 per cent.

The divide between the north and south is becoming greater in the property market, with London and surrounding areas far outstripping the performance of the rest of England and Wales. In the capital, the time on the market for unsold properties has shrunk to a median of 75 days, while the volume of new properties for sale is down 19 per cent year-on-year. This is creating a highly competitive environment for buyers and despite attempts to increase affordable housing stock, demand is still outstripping supply.

Nevertheless, there is definite optimism about the state of the property market in the UK. Activity is increasing and government schemes are helping to give first-time buyers the confidence they need to get a foot on the ladder. However, now is not a time for the sector to rest on its laurels. Doug Shephard, director at Home.co.uk, explained: "Another considerable price rise in the capital is truly exceptional and, combined with a relatively short time on market, is clearly excellent news for vendors.

Potential buyers, already frustrated by the lack of choice, will have a tendency to "panic buy" when faced with such spiralling home prices. It remains to be seen how high prices in the region can rise and with the combination of government backed low mortgage rates and a flood of overseas investors it would appear the sky is the limit."

Will more house building really help to ease house prices? An alternate opinion here

15 April 2013

Tags

House Price Values,Asking Price Index