Home Buying Demand For Homes Increases While Supply Shrinks

Demand For Homes Increases While Supply Shrinks


The number of homes coming to the market in January 2021 fell by 12% when compared to January 2020. At the same time, demand increased by 13%,

This single fact shows us just how in-demand the UK housing market currently is, and also explains why house prices keep rising: when demand outweighs supply, value increases.

Many experts say that demand is high due to the stamp duty tax relief which expires in March. But, if this was the whole story, we should expect to see more homes coming to market as more people look to move.

Instead, supply has dropped. This might tell us that much of the demand the market is currently enjoying is coming from first-time buyers – people who want a new home but don’t have an existing one to sell first. Such buyers are exempt from stamp duty regardless of any holiday.

Regionally, Wales is the fastest growing market, enjoying 5.4% price rises, while Liverpool tops the UK city table having seen prices rises of 6.3%.

Vaccine = Safe To Move

Despite the mismatch between supply and demand, experts are expecting supply to increase over the coming months.

They suggest that, as more and more of the population is vaccinated against Covid-19 and the infection rates finally start to dissipate, more people will feel confident that it is safe to move home. Many people are still being cautious, postponing any plans to move until the virus is a thing of the past.

If this comes to fruition, we could see the market flooded with new listings. If, as many experts suggest, demand drops after the March SDLT deadline expires, this means we could see a complete reversal of the current situation.

In a few months, we could have a surplus of supply and declining demand. In such an instance, house prices would fall.

This is all guesswork, of course, and we know how unpredictable the market has been of late.

For example, if first-time buyers are indeed as active as the demand vs supply data shows, the end of the stamp duty will do little to reduce demand, so house prices could very well keep rising.

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