Buyers being hampered by lack of new real estate coming onto market
There was a surge in interest from property buyers in the UK in the first few weeks of 2012 but they are being hampered by a lack of new real estate coming onto the market, research suggests.
Search activity during the first 10 days of 2012 reached new record heights, up by 27% on the same period in 2011, as prospective movers intensively research the market, according to the first Rightmove report of the year.
However, they are faced with the lowest level of new supply per estate agency branch that Rightmove has ever recorded, an average of less than one new listing per branch per week.
The data shows that there were more than 44 million property searches on Rightmove during the first ten days of 2012. While this doesn’t necessarily indicate a surge in proceedable buyer numbers, it does highlight a strong pent up demand to move and is also a reflection that value seeking buyers who can proceed are taking extra care to research the market, the company points out.
Rightmove says an increase in the number of mortgages available to the market would help boost sales.
As well as less property coming to market there is less available stock already on the market compared to the same period last year. Average unsold stock per estate agency branch is 66, the lowest since February 2010.
The 36,433 properties coming to market this month equate to an average of less than one new listing per branch per week. This is the lowest recorded in the ten years of Rightmove’s House Price Index and around half of pre-credit crunch levels.
Agents report prospective sellers are being deterred by a combination of a shortage of confidence, lack of choice of property to buy and restrictive mortgage lending. Depending on local market conditions, there will be differing pressures on the direction of prices.
Rightmove also points out that the lack of property coming to market in some areas will help to underpin new sellers’ asking prices in those locations, especially as estate agents compete to attract fresh stock for the new year.
January often sees the beginning of a ‘spring bounce’ in the asking prices of properties coming to market, and there is again evidence of this with an increase of 1.4% in the first week of 2012. But this is masked within the overall monthly price fall of 0.8%. In spite of the challenging market, year on year asking prices remain virtually unchanged, up by a nominal 0.4%, though with RPI running at 5.2% this represents a fall in real terms.
‘The increased market fragmentation caused by the credit crunch means that success in selling now requires a very careful and complex micro market analysis, rather than a wishful price punt to see what happens. There can be hotspots and blackspots by property type within the same geographic location depending on local buyer confidence, demographics and their ability to obtain a mortgage, so doing your research and taking expert advice are critical,’ said Rightmove director Miles Shipside.
‘There will be upwards price pressure where the local market is short of a type or style of stock. In these areas, getting your property onto the market soon could be to a seller’s advantage given the strong upsurge in property search activity,’ he added.
Rightmove forecasts that the market will remain challenging and fragmented during 2012.