How a Lack of Stock Is Affecting House Prices
A shortage of property stock has driven up house prices to the highest level ever, according to data from Rightmove.
Average property prices rose by almost £7,000 over just a month in March 2021, reaching an average high of £327,797, according to the property portal. This was largely down to market shortages as more people look for homes outside of cities as a result of the move to home working.
The surge also coincided with an extension of stamp duty relief, cheaper mortgages and an increase in confidence as a result of the success of the vaccination programme.
Rightmove’s Tim Bannister said that the price jump was just the second instance in five years when prices went up by more than two per cent in a single month. He added that this latest rise was particularly significant given that there were still lockdown restrictions in place curbing people’s activities and movements.
He said that new space requirements by buyers had aligned with the stamp duty holiday, cheap mortgages and the support by government for 95 per cent mortgages to lead to a shortage of properties for people to buy.
Bannister said that the current market conditions meant that buyers needed to be prepared to move fast in order to secure sales.
Perfect Storm for Stock Levels
Conditions have combined to create the perfect storm when it comes to low stock levels, financial incentives and buyer demand. This means that buyers are now facing higher prices than ever before, and this includes first-time purchasers who are making use of the likes of shared-ownership schemes, the mortgage guarantee scheme and the Help To Buy loan initiative.
The higher prices are combing with the lowest ever amount of stock in the property market to create difficult and frenetic market conditions for buyers of all kinds. Estate agents have been marking properties as sold in an average of 45 days, and high numbers of buyers are making full use of the likes of the Help To Buy loan scheme and property-related services such as those offered by Sam Conveyancing.
It is believed that housing stock levels in March were the lowest in at least two decades, according to Cheffins’ director Richard Freshwater.
As the spotlight was put on difficult market conditions for buyers, leading banks launched the new five per cent deposit mortgages. These are part of the 95 per cent mortgage scheme launched by the UK government. Read more about this at https://www.gov.uk/government/news/new-95-mortgage-scheme-launches.
Almost all of these types of property loan were previously abandoned by lenders as a result of the coronavirus pandemic and the lending risks involved.