The general election in the UK did not hit the UK property market but a continuing lack of lending has led to a finance famine leaving first time buyers and real estate investors unable to proceed, according to a new report.
Overall asking prices rose just 0.7% over the last month and fell in some areas as buyers put of moving, the monthly index published today (Monday May 17) from Rightmove shows.
Some 70% of people told Rightmove earlier this hear that the election would not affect their moving plans and the week before Britain’s May 6 election saw the biggest increase in new sellers since June 2008, it said.
The index also shows that the annual rate of increase fell from 6% to 4.3%, suggesting that the real estate market is cooling after months of price increases. In London, the surge of stock means there are double the number of new properties on the market compared with this time last year, and asking prices fell slightly by 0.4%.
‘The election was held in the middle of the spring selling season, but there is little sign that it deterred people from selling their houses. New sellers have already been holding back on coming to market for nearly two years, and as kids do not stop growing in a recession, some family houses must be bursting at the seams,’ said commercial director Miles Shipside.
While sellers don’t appear though to be put off, the rising levels of unsold stock indicate that buyers are not as willing or able to act upon their pent-up moving desires, he added.
‘Potential buyers remain in a difficult position however, with lenders’ deposit requirements and credit worthiness criteria still marginalising a large body of would be home-movers. The number of people who can proceed with nothing to sell has dwindled, with first time buyers and amateur investors particular casualties of the finance famine,’ he explained.
‘As a result, the market has to either operate at reduced sales volumes or hope that sellers can sell to each other, forming circular chains by trading up and down. This is a much more inefficient model, with less chance of sales success and longer lead times contributing to increasing stock levels,’ said Shipside.
‘While new stock remained low, this inefficient market was able to maintain prices as long as supply broadly matched demand. With more sellers now marketing, this uneasy equilibrium is in danger of becoming unbalanced. There aren’t enough ready and able buyers to soak up a surge in fresh stock,’ he added.
He also believes that if more property was at last year’s bargain prices then cash rich investors could be tempted out of the woodwork to help make up for the missing mortgage-reliant buyers. ‘One year on, sellers’ prices are less tempting, and that will lead to an over supply in less popular areas,’ said Shipside.
Rightmove also recorded a substantial jump in unsold stock per estate agency branch, increasing from 68 to 71 in the last month. It is the third consecutive monthly increase, contrasting with the same period last year when bargain hunting buyers started to snap up available stock and gave a firm base for confidence boosting upwards price pressure.