Housing supply and first time buyer levels falling

Demand for housing has hit an 11 year high but the supply of homes to buy has dipped, according to the latest market report from the National Association of Estate Agents (NAEA).

In its report for June 2015, the organisation said 439 house hunters were registered on average per NAEA member branch in June, 15% more than in May when 383 house hunters were registered per branch – it’s also the highest figure since August 2004 when 582 were recorded.

Despite this jump in demand, the report said that supply of housing stock fell marginally from May, to just 44 houses available per branch (compared to 46 in May), widening the growing gap between supply and demand.

“What we’re seeing is a market that lulled over the General Election period, coming back to life in full force,” Mark Hayward, the NAEA’s managing director. “Buyers are feeling more confident and those who put their plans on hold over the Election and political aftermath have kicked off their hunt, causing this massive jump in demand. There’s also an impetus to buy right now in light of the impending interest rate rise as buyers fight to buy and fix mortgage rates. But the fact that demand is at an 11 year high without the housing stock to fuel it, is bad news for the market.”

As the gap between supply and demand widened in May, activity remained consistent, with nine sales made on average per branch for the second month running, the NAEA added. However, the number of sales made to first time buyers declined in June, with the group accounting for just 24% of sales, compared to 29% in May.

“Although activity is still slow, it’s very promising to see that the surge in demand and dip in supply hasn’t caused activity to halt, and houses are still being sold,” Hayward added. “However, the growing gap between supply and demand is worrying and clearly demonstrates that more needs to be done to plug this. The Election was full of promises to build more houses, but now those promises need to be put into bricks and mortar to respond to demand.”

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