July market snapshot
Rightmove report the busiest ever first half of a year pushes the average price of property coming to market to a new record high for the fourth consecutive month, and £21,389 higher (+6.7%) in just six months.
With the first half of 2021 seeing 140,000 more sales being agreed and 85,000 fewer new listings than the long-term average, this surge in activity has revealed a shortfall of 225,000 homes for sale which, if available, would have corrected this stark imbalance between supply and demand, and would have stabilised price growth.
Here are the headlines
Homes with 4 beds and more are facing the biggest imbalance with 39% surge in sales and 15% fall in numbers coming to market versus 2019, resulting in an average price hike of 6.7% in the last six months. The 3-bed sector sees 28% jump in sales while suffering a 10% drop in new supply versus 2019, with prices jumping up by 6.9% so far in 2021. First-time buyers faring best as two beds and fewer have unchanged new seller numbers with sales up by a slightly smaller 26%, resulting in a smaller average price rise of 3.4% for the half-year.
The UK economy grew by 0.8% in May, lower than expected, but the fourth consecutive month of growth was boosted by the easing of restrictions in the hospitality and accommodation sectors. The economy remains 3.1% below the pre-coronavirus pandemic levels seen in February 2020 (ONS).
The UK unemployment rate fell from 4.8% in March to 4.7% in April. Many businesses are recruiting staff to deal with pent-up demand as restrictions started to lift. However, around 3-4 million workers remain on furlough and as yet the impact of the 4-week extension to lockdown easing on the economy is unknown.
Mortgage approvals in May for house purchases were 34% higher than the April 2014 to 2019 average and an astonishing 827% higher than May 2020.
Buyer demand has been strong since the start of 2021, up 26% compared to 2020, while supply levels are 24% lower (Zoopla). Demand is strongest for properties priced up to £250,000, but remains higher than pre-pandemic levels across all price brackets. The Dataloft Demand Index, monitoring hits on agents’ local housing insight page, suggests housing market demand is up over 140% on last year.
At Ocean we can concur with website activity in June at 144% on 2020, with 193.4k page views. Enquiries across the city remain extremely high with all of our offices working very hard to keep up with demand.
Rightmove expects that the number of sales completed in the first six months of the year and due to be reported by HMRC later this week is on course to be around 800,000, which could just beat the previous record of 795,000 set in 2007. Analysis shows that the shortfall of 225,000 homes for sale comes from 140,000 more sales being agreed and 85,000 fewer new listings than the long-term (2014-2019) average for the first half of a year. The net result of this major imbalance between supply and demand is that the average number of available properties for sale per estate agency branch is at a new record low.
With the ongoing need for housing, high activity levels despite the June stamp duty deadline now passing, and with residential property prices appreciating better than many other asset classes, we expect positive sentiment to continue.
Prices are rising fastest in the most affordable markets as activity continues at elevated levels among first-time buyers and movers looking for more space or a lifestyle change.” says Gráinne Gilmore, Head of Research, Zoopla.
Investment & lettings
Average rental values across the UK rose by 1.2% in the year to May 2021, rents in the UK excluding London increased by 1.8%. Northern Ireland (3.4%), East Midlands (2.4%) and West Midlands (2.4%) experienced the largest increase in rents.
Tenant demand growth remains strong at a national level, the latest net balance of RICS agents +48 (May 2021. Hometrack report demand in April was up 59% compared to April 2017-2019 for rental property outside London. Supply to the market remains constrained, underpinning prices.
Tue 20 Jul 2021