Data from Rightmove has shown an unexpected strong start to Spring for sellers. Not only is it a strong start, but the conditions of the market make it the best seller’s market in the past 10 years.
Despite the ongoing global pandemic, with the country being in and out of lockdowns over the course of a year, the housing market has been one of the key factors which has keeping the economy going.
It was predicted that at some point soon, the housing market bubble would burst but recent data only seems to be showing the opposite…
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What does the data say?
Recent data from Rightmove shows a record number of buyers enquiring about properties, with demand 34% higher than it was this time last year – which in itself was a very active period, just before the first lockdown.
There is also the greatest excess of demand over supply in the past 10 years, applying upward pressure onto housing prices, with the average property price coming onto the market up 0.8% compared to last month. Also, the national average house price is now at £321,064, an increase of 2.7% over the last year.
Why is it a seller’s market?
Nearly 2 out of 3 properties on estate agent’s books are ‘sold subject to contract’, with the number of sales agreed in the first week of March 12% higher than a year ago. These factors combined with the drop in housing listings by 20% in February, make the market a seller’s market.
This is because whilst demand for housing is very high, supply is actually quite low. This means there’s a big excess of demand over supply – the greatest that’s been seen in the past decade.
The excess demand will mean that buyers are eagerly waiting to see what properties come on the market, ready to snap them up. When demand exceeds supply, the price is driven up, explaining the upward pressure on house prices.
What are the downsides?
Comparison website ‘GetAgent’ looked at the time taken for a sale to be completed. Now, the time taken from initial listing to Land Registry stating the sale is complete averages at 295 days, which is over 6 weeks longer than the previous year.
This long delay is not going to be helped by the high demand for houses.
The stamp duty holiday will also see a tapered ending, with the £500,000 nil-tax band ending on 31st June 2021, which will see addition to the delays as more buyers are trying to buy a house and try push their sales over the line before the deadline.
What will happen in the future?
Although we said house listings on Rightmove were down 20% in February, the first week of March saw house listings down only 5%. The more properties that come onto the market, the less pressure on house prices, meaning the continuous rise of house prices will likely come to an end soon.
Spring season is also a notoriously popular time for selling, meaning it’s likely more sellers will soon come onto the market, further reducing the upwards pressure to house prices.
One thing no one can be sure about is whether the end of the stamp duty holiday is going to bring a halt to the positivity and ‘business’ around the housing market. Will the demand and supply run out? Will the housing market fall off a cliff? Or will things calm down for the better, and see house sales complete at faster speeds?
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Millie is a perfectionist with a passion for property and writing articles. You’ll find her researching the latest housing trends and the newest up and coming areas worth investing in. Read more about Millie here.