A chronic shortage of homes for sale is pushing house prices in the UK even higher, a property investment specialist has warned.
The UK housing market may have ended 2016 on a positive note, according to the latest report from the National Estate Agents Association (NAEA), with the prospective number of buyers registered with the average agency branch increasing by 12% to 386 in December. But with the average agency branch having just 41 properties on its books, the supply of housing remains low in comparison.
“Despite an encouraging December, there remains a clear shortage of homes,” said Mark Hayward, NAEA managing director.
The low number of homes coming on to the market is thwarting home buyers and pushing home prices up across the UK, as reflected by the latest house price data from Nationwide, released yesterday, which shows that residential property prices in the UK increased by 0.2% last month on the back of the supply-demand imbalance in the market.
According to the mortgage lender, the average price of a home in the UK rose by 4.3% year-on-year in January.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: “The severe shortage in stock and available homes for sale is the underlying dynamic propping up prices coupled with ultra-low borrowing rates.
“Estate agents appear to have a dearth of properties on their books and hence demand keeps outstripping supply. And although it’s early days, we expect over 2017 as a whole, that price growth will remain positive.”
London, formerly the runaway leader in the UK property market, has seemingly lost momentum in prime central locations. But outer boroughs in the capital, particularly areas of regeneration and along the Crossrail route, could potentially see house prices steam further ahead once the stations are complete next year.
Weaver added: “The North-South divide may well narrow as London loses its luster over affordability issues and other big cities like Manchester, Leeds and Birmingham play catch up.
“Whatever blows the market might have suffered – whether it’s the cooling effect of Brexit uncertainty, changes to tax or tighter lending criteria – UK residential appears to remain resilient and stable.”