The UK housing market has become so busy that one major estate agent has announced that an average of 13 buyers are battling it out for every one home that comes onto the market.
According to Knight Frank, September was only the second time in the past five years that buyer registration spiked to such an extent that there are now 13 buyers for every one home. Only the immediate aftermath of the December 2019 general election has new demand been higher.
The estate agent says the cause of the demand spike is an ‘unseasonably low supply’ of homes during Autumn, a time when supply usually increases as more and more people try to be in a new home before Christmas. Instead, Autumn demand has been 57% above the five-year average between 2015 and 2019.
Knight Frank also says that low interest rates and high employment numbers are also ensuring that demand remains high, and when demand remains high, so too do prices.
However, Tom Bill, head of UK residential research at Knight Frank, had the following to add:
“The rising cost of living, however long it lasts, may cause some fraying around the edges but demand is likely to remain robust over the next six months.
“The vicious circle of low supply won’t become a virtuous circle overnight. More prospective vendors will come forward as they find their own purchase options, a process that is underway but requires time. Sales instructions have hovered around the five-year average this year but the shelves are emptying more quickly, creating the kind of disruption seen in other parts of the economy.
“As a result, supply didn’t pick up this September as it has in previous years. The number of instructions to sell was 26% below the five-year average and 51% below September 2020.
“Tighter supply means a greater proportion of buyers and sellers will be needs-driven over the next several months. However, there will be a seasonal injection of new supply next spring.
“For now, the imbalance is keeping upwards pressure on prices even though the stamp duty holiday has ended. As supply and demand normalise, the main UK house price indices should continue to slowly deflate.”