31st August 2021

Prices still on the up as ‘Supply & Demand’ continues to frustrate Buyers

The flow of new homes being listed for sale, or ‘new supply’, has been around 5% down on typical levels since the start of the year, and is not enough to replenish the total stock of homes for sale, which is down 26% compared to last year.

Looking further back as a comparison, total stock is down 33% compared to this time of year in 2018 and 2019, and 25% lower than 2016 and 2017.

There are several factors which have come together to result in the erosion of the stock of homes available for sale. First is the sheer level of activity in the market. Completed sales jumped by 25% in the 12 months to June, compared to the same period in 2019, according to HMRC data. This means 1 in 20 homes changed hands over the last year, compared to 1 in 25 two years previously.

Sales agreed also ticked up again in August, and while they are down compared to the peaks seen in early April, they are still running 21% above the levels seen in the summer of 2018/19.

The ‘reassessment of home’ among households as a result of the pandemic, coupled with the tax savings on offer due to the stamp duty holiday, resulted in higher numbers of home-owners making a move. This created churn in the market – but typically a home-mover both buys and sells, creating demand and supply. Yet with the focus on demand for larger family houses, amid a ‘search for space’, this type of stock has become stretched, reflected in the average price for a house rising 7.6% over the last 12 months.

The supply squeeze for flats is more muted, and price growth for this type of home is up 1.2% on the year.