Demand for property outstrips supply

An average of five house hunters were registered on estate agent's books for each available property in the month of October.

However, the healthy level of interest failed to convert to sales, with agents selling an average of 7.7 properties each, compared to 8.5 in September.

According to data from the National Association of Estate Agents (NAEA), the actual number of homebuyers also went down to 287, falling from 294 in September. But that figure is considerably more promising than the 196 househunters registered in the same month last year.

The NAEA attributes the apparent rise in demand per property to a fall in the number of homes for sale. Estate agents reported that the average number of properties available for sale per branch dropped from 62 in September to 57 in October.

The lack of supply has underpinned the house price increases we have witnessed since the summer. Halifax reported this week that average property values rose 1.2% last month, boosting the average cost of a home to £165,500.

Gary Smith, president of the NAEA, said:

“There is strong demand for property and more optimism in the housing market than we have seen for months. This is good news for the recovery of the market and for the British economy in general.”

The figures also revealed first-time buyers accounted for 22% of sales agreed during October, which is down from 26% the previous month, but more than double the 10% reported in October last year.

Melanie Bien, of mortgage brokers Savills Private Finance, said:

“The dearth of flats and houses coming onto the market means that even those who can obtain the necessary finance may not find a suitable property to buy.

“Family homes are in particularly short supply and prices are being sustained because of the demand for each property that comes onto the market. Until more properties become available and finance is more readily accessible to those with small deposits, the number of transactions will remain woefully low.”