Housing demand is up but supply down

POTENTIAL buyers are finally returning to the UK housing market – but are frustrated by a lack of housing supply and mortgage approvals. 

The National Association of Estate Agents monthly market survey found that in January the number of house hunters on an average estate agent’s books had risen to 242 from 200 in December.

However the increase in demand did not translate into an increase in sales – which remained at six per agent in January. Encouragingly, however, 25 per cent of those sales were to first time buyers – more than double the number in December. 

One reason why demand is not following through in transactions was demonstrated in the monthly housing stock figures, which showed that estate agents had an average of 75 houses on their books in January – the lowest number in more than 12 months and down from 100 in December.

This is likely to be in part caused by sellers withdrawing their properties from the market after pricing optimistically and being unprepared subsequently to drop their prices.

NAEA figures showed that the average selling price across all types of property was 8.7 per cent lower than the original asking price.

House hunters are also likely to be frustrated by the ongoing difficulty of obtaining a mortgage – however the NAEA’s figures suggest that when a mortgage is available people are no longer afraid to invest in property.

Chris Brown, President of the NAEA, said: “It is great that the pent up demand for housing in Britain – which the NAEA has long stressed was there – is now registering its interest with agents and beginning to look at property.

“But one positive sign in the housing market simply cannot be taken to represent the beginnings of a recovery. The number of sales per agent has held steady for the past three months and remains higher than it has over previous months – this is a good sign but frustrating as the evidence suggests it could increase substantially if mortgages were more easily available.”