According to the latest Rightmove house price index, demand for properties remains high, with both visits to the Rightmove website and enquiries to estate agents up by 22% in June compared to the same period a year ago.
But the index showed supply was failing to keep pace with buyer appetite, with the biggest supply and demand gap in the first-time buyer market, where the number of enquiries for properties with two bedrooms or fewer was 24% higher than for larger properties of three bedrooms or more.
The average number of properties for sale per estate agent also dropped in June compared to the same period last year from 71 to 65, but has seen a steady since December when they dropped to 57.
Trevor Binch, managing director of estate agent Merrick Binch, said two-bed and sometimes three-bed terraced houses available at under £150,000 were ‘selling immediately’.
“There are a lot of investors snapping up these types of properties, and this, coupled with the fact that a lot of sellers aren’t coming to market, is making the supply shortage worse. While there are some new developments being built in Coventry, there just isn’t enough to satisfy the demand, especially at the lower end of the market.”
Property prices hit a record high for the second consecutive month, rising modestly by 0.1% to £294,542 in July, an annual change of 5.1%.
Regionally, house prices saw the biggest monthly change in the North East, where the average price increased to £147,251 in July, a rise of 2.1%. Yorkshire and Humber was the UK’s worst performer in July, as the average property value dropped by 0.8% to £172,412.
Miles Shipside, Rightmove director and housing market analyst, explained that the challenge for developers would be to determine how to deliver more low-cost homes that met consumer demands, as building larger homes delivered greater profit margins and attracted buyers with less-stretched affordability.
“The forthcoming extra tax burdens on buy-to-let investors may help to tip the balance in favour of first-time buyers, but the consequent drop in rental property supply could push up rents,” he said.
“The challenge for government, planners and developers is how best to ensure the right properties are built in the right locations and at more affordable prices. This will however depend on addressing capacity constraints in the building industry, the price of land for housing, the consistency of funding for key players in the construction sector and the overall stability of the housing market and the wider economy.”
