Time and time again we hear experts suggesting that the UK residential property market has been supported to a certain extent by a lack of affordable/right type of property. When you consider this argument it seems perfectly sensible but very few experts have the figures available to back up their opinions. So, we thought we would take a look at the Office for National Statistics (ONS) report on property sales in England and Wales since the 2007 economic crash. This make for interesting reading!
The figures for England and Wales on an annualised basis peaked to the year ended June 2007 with a staggering 1.356 million properties changing hands during the 12 month period. When you bear in mind the figure today is a relatively paltry 844,424 to the 12 month period ended March 2017, this does begin to give a better picture. That is a phenomenal 37% reduction in the number of house sales over a 12 month period since the worldwide economic collapse. This figure fell to a low of 508,616 to the year ended June 2009 although it has all been downhill since the recent peak of 986,362 in March 2016.
London property sales
The impact of the recent market downturn on London property sales is even more acute than that for the whole of England and Wales. To the 12 month period ended March 2007 there were 177,401 property sales in London which does not compare well to the corresponding figure in March 2017 of just 89,245 properties. This is a near 50% collapse in property sale numbers for London and with concerns about the potential impact of Brexit on the financial sector this is unlikely to recover in the short to medium term.
As with the whole of England and Wales, the property sales numbers for London hit a low of 59,032 to the 12 month period ended June 2009. The London market sale numbers were volatile although they did hit a recent high of 122,436 to the 12 month period ended March 2016 and then began the slide to the March 2017 figure of just over 89,000 property sales.
Other areas hit hard
Despite the fact that the north-east of England has not been as buoyant as the rest of the UK over the last 20 years or so, there was a significant fall in the number of property sales during the period in question. They fell from 61,808 in the 12 period ended March 2007 to just 35,375 in the corresponding period ended March 2017, equating to a 43% reduction. Yorkshire and the Humber was also hard hit as the number fell by 40%, with the north-west of England and the south-east of England both falling by 38%.
So, are falling property sales figures supporting house prices?
It stands to reason that the fewer properties available for purchase the greater the competition for those on the market. Hence, it is probably fair to argue that an element of current average UK house price has been supported by a lack of properties for sale. The cost of moving property, especially associated tax charges, has increased dramatically over the last decade and it is unlikely we will see a recovery in property sales numbers in the immediate future.