Record property sales mask a serious supply shortage
The first half of 2021 was the busiest ever first half of a year, with 140,000 more sales agreed than the long-term average. according to Rightmove.
The property portal said that the asking price of property coming to market rose to a new record high of £338,447 in July, after increasing 0.7% compared to June, and 6.7% since the start of the year.
However new property listings are down on the long-term trend and the surge in activity has revealed a shortfall of 225,000 homes for sale. Rightmove calculated that, if this number of homes been available for sale, it would have corrected the stark imbalance between supply and demand, and stabilised price growth.
With high activity levels continuing despite the June stamp duty deadline now passing, there is an urgent need for these low stocks of property for sale to be rebuilt in order for price stability to return.
Tim Bannister, Rightmove’s director of property data, said: “We predict that the number of completed sales will be the highest ever seen in a single month when June’s data is released by HMRC later this week. This means it’s likely that the first half of 2021 has seen a record number of moves when compared with the first six months of any other year, induced by the pandemic’s side-effect of a new focus on what one’s home needs to provide.
“That is one of the driving forces behind four consecutive months of new record average property prices. Demand has also been boosted by the ongoing creation of new households, and property being seen as an asset to hold, with historically low returns from many other forms of investment. New stamp duty deadlines in England and Wales for sales completed by the end of June have also helped to exhaust the stock of property for sale and concentrate activity. This has left prospective purchasers with the lowest choice of homes for sale that we’ve ever recorded, continuing price rises, and stretched affordability.”
John Eastgate, managing director of property finance at Shawbrook Bank, added: “The exceptional times in which we find ourselves makes any analysis of short term movements in house prices more than challenging. Extreme demand, extreme stimulus and a dearth of supply have created a unique scenario.
“But if we look longer term, history shows us that the housing market has a long-term pattern of strength and resilience. While the ending of lockdown and the Stamp Duty Holiday will naturally lead to a slowdown in activity levels, a supply/demand imbalance and continued commitment to move from buyers will help to ride out any significant drop-off in activity.”