Buyer demand is outstripping supply at the fastest rate in a decade, according to Rightmove.
The sure in the number of people looking to purchase property is placing upward pressure on house prices, with the average price of a home coming to market increasing by 0.8%, or £2,484, so far this month.
The number of potential buyers enquiring about each available property on Rightmove this month is up 34% on the corresponding period last year, which was itself an active market before the first lockdown
With sales already agreed for almost two out of three properties on agents’ books, this is potentially a good time to sell, and there are early signs that more owners are now deciding to market their properties, spurred by incentives, such as the stamp duty extension, 95% LTV mortgage guarantee scheme, and lockdown easing.
The start of traditional spring selling period has seen the number of sales agreed for the first week in March up by 12% on prior year despite shortage of available stock.
Tim Bannister, Rightmove’s director of property data, commented: “Concerns of a cliff edge for the housing market at the end of March have dissipated, partly due to the tax deadline extensions in all of the UK bar Scotland, but also because the already high level of buyer demand caused by the lockdowns has continued to surge since the start of the year.
“This demand will be further boosted from April by the new government guarantees enabling lenders to bring back 5% deposit mortgages. Whilst it is unfortunately not the perfect time to buy for some people who have been adversely affected by the pandemic, the record buyer demand measured by Rightmove indicates that now is the right time for many.
“Record-low interest rates and the new focus on what your home needs to offer after several lockdowns have led us to the greatest excess of demand over supply in the last ten years. This strong sellers’ market is good news for those who are looking to put their home on the market as the traditional Easter selling season approaches.
“Blossoming buyer demand coinciding with blossoming gardens should put a spring in the steps of sellers, and more of them coming to market will provide a much-needed increase in the choice of property for the many who are looking to buy.”
He continued: “So many sales have been agreed in recent months that we now face a serious shortage of homes available for sale. There are lots of reasons why many home-owners have hesitated to come to market during the first two months of the year, but these do now seem to be dissipating.
“A recovery in fresh supply gives more choice to prospective buyers, many of whom are also potential sellers, which in turn encourages more of them to come to market. Greater supply to match the high demand would ease upwards price pressure.”
But he expects price rises to be tempered by the tighter lending criteria imposed by the Bank of England upon lenders following the Mortgage Market Review in 2014.
Restrictions on borrowers’ income multiples alongside stress testing of future affordability were specifically designed to guard against the destructive booms and busts of the past, limiting buyer borrowing power and preventing excessive price movements.
He added: “The current annual rate of house price increase stands at a historically modest rate of 2.7%, but we stand by our forecast for the year of 4% which we published in December.”