Why There is a Lack of Houses on the Market
The property ladder. It’s an achievement for many, and a distant stairway to heaven for others. For a number of years now it has been a nationwide discussion about “generation rent” and their battle against crippling deposits in order to buy their own homes. And whilst there have been a couple of saving graces, such as Help to Buy schemes and shared ownership on properties, it would now appear that there’s a shortage of houses actually available to buy. That said, apparently 36% of homes sold in the first half of 2018 were to first-time buyers. And in London alone, just under half of all homes were bought by this category, putting down an average deposit of 27%. There is hope after all!
Whilst first-time buyers may be at their highest in over a decade, the fact still remains that there isn’t as many properties on the market anymore. Why could this be? Well, according to accountant, Moore Stephens, a quarter of estate agencies are facing financial difficulties. On top of that, a combination of diminishing capital, political uncertainty, and rising taxation have resulted in people only moving homes if they really have to. For example, upsizing as their family gains more members, employees relocating, and also high rental prices. Additionally, in June this year more homes for sale were withdrawn from the market than those which actually reached sale completion. This would suggest that sellers were receiving relatively low interest from prospective buyers, or not receiving the offers they had hoped for.
Another reason for the lack of property available at the moment is due to the decreasing number of new houses being built. According to Ashley Osborne, the head of UK residential for Colliers International, construction levels have decreased by 30% from 15,000 homes per year in 2014 down to 10,000 in 2017. Mr Osborne also argues that it isn’t just a lack of demand resulting in a lack of new houses, the lack of skilled labourers is a worrying notion, especially in the event of a no-deal Brexit. Additionally, the rising price of the necessary materials could also be a significant factor in those bricks remaining unlaid.
So where in particular is suffering from fewer houses being sold? This is the latest in Hopewiser’s “Best and Worst” series that follows address-based happenings across the UK, from the priciest properties in the country, to where the highest performing schools are located, and even car parking pandemoniums. Using freely available data from The Times’ Bricks & Mortar instalment, we take a look at the best and worst areas for Britain’s buyers and sellers.
Starting with the worst locations for buying and selling property, a postcode in Liverpool city centre was ranked fifth on the list. I started thinking about the possible reasons for this and concluded that the high buy-to-let returns could be a significant factor. With a student population of 70,000, it’s fair to say that rental properties are in high demand. With an average housing price of £142,067, it is below the national average meaning landlords may not be eager to sell up if they feel that they can make more money by continuing to rent their properties out to the abundance of students coming to live in the city each year.
Also featuring in the cold market were eight London postcodes. That’s right, eight! However, that isn’t really surprising considering how extortionate the cost of living is, with an average property price of £560,042. In this particular instance it’s possible that homeowners are struggling to sell their properties because prospective buyers cannot afford the asking prices. Gavin Brazg, founder of The Advisory, expressed “sellers in a cold buyers’ market should not be downhearted because buyers are out there; they’re just more price and condition-sensitive”. Therefore, rising property values are being reflected in their pricing and this could be having a significant effect on purchasing power and subsequently the market slowdown.
However, every cloud has a silver lining and The Times have also listed the hottest postcodes for buyers and sellers. If you find yourself on the property market in one of these areas then lucky you! With four postcodes featuring on the top ten list, Birmingham appears to be a prime area for house buying and selling. Why is this, we’re both wondering? The article goes on to say that around half of the students who attended university in cities such as Birmingham and Manchester (also featuring in the hot market list) end up settling there. Not only that, they have a higher chance of being able to afford to buy a flat than those living in London, despite the considerable difference in salaries.
The average price of a flat in Birmingham is £157,599 and the average salary is £28,815. Slightly further North in Manchester, it is £184,819 and £29,889. This is as opposed to London, where 77% of the city’s students remain to work and live, and the average flat is priced at £560,144 with an average salary of £37,209. It’s amazing to think that for the price of a London flat or apartment you could purchase a sizeable house up North. Crazy!
Another plus side to being a homeowner in the North is that you will probably see a greater capital appreciation on your property as opposed to those living in London. In the year to May, flat prices increased by an average of 6.8% in Birmingham and 7% in Manchester. In comparison, the average price inflation in London was only 5.7%. Therefore, there might be more properties for sale on the market in the North due to the capital appreciation that sellers want to cash in on. Thus providing more opportunities, albeit potentially more expensive ones, for buyers.
Do you live in one of the areas that we and The Times have mentioned here today? Maybe you’re in the process of buying your dream home, or perhaps you’re struggling due to either the price in certain locations or a lack of properties currently available. Whichever, we’d love to know your thoughts so please do get in touch. No matter where you live, you can download our free app, Proximity, to find your nearest transport and leisure facilities. For your free download, head over to the App Store or Google Play today!