Housing stock has fallen 40 per cent since the beginning of this year, driven in large part by the perception of an “insurmountable” market facing buyers, according to an agency.
Research published by UK estate agent body Propertymark found the number of houses for sale in the UK has steadily declined over the past eight months.
It showed an average estate agency branch now has around 23 properties listed to buy, with 19 buyers on average showing interest in any one property.
One reason for the housing market’s continued supply and demand gap is sellers being too nervous to enter the market, according to Nathan Emerson, Propertymark’s chief executive.
“Our worry is people think the market is insurmountable,” he told FTAdviser.
“Very few people can buy without selling, so the majority of buyers need to put a property on the market before they can buy their next property."
Pre-pandemic, Emerson said properties experienced 13-14 viewings before landing a sale. But now, agents are selling properties after showing them to just three or four prospective buyers.
“Properties are selling in much shorter periods of time, which means people think they haven’t got time to sell their own property” he explained.
“If we’re not careful, we could create an unusual marketplace purely based on lack of confidence about moving.
“But the reality of the situation is very different. Properties are coming up all the time, but buyers have got to be in it to win it.
“If they keep viewing properties without selling the one they’re in now, then they fall into this self-fulfilling cycle."
The average time taken for a sale is around 16 weeks to exchange, according to Emerson. "That’s four months and the likelihood of not finding an onward property in that time is very small.”
As a result of consumer attitudes to the market, Emerson also noted agents starting to reduce their fees in order to incentivise more properties to pitch up For Sale signs.
This fee, a percentage of the sale price, is largely spent on marketing the property. “As the market cools off, this becomes important.”
But in order to protect their profitability if fees fall, Emerson said agents “might spend less on advertising” which impacts the consumer awareness of properties on the market.
Emerson reckons the housing stock shortage won’t resolve itself this year “by any stretch of the imagination.”
“We’re going into a quiet period, which means the market would only have three months [October, November, December] to put stock on an even keel.
“We’ll be into the next year before we start seeing housing stock numbers rising again.”
ruby.hinchliffe@ft.com
