Falling stock and growing demand push UK property prices higher

In what could become a worrying phenomenon in the short to medium term, official statistics show that the month of July saw a significant fall in the number of houses for sale, while demand continued to grow. For those holding UK property at the moment this will at worst help support prices but for those looking to climb aboard the property ladder it could mean an extended wait.

While the UK economy is holding steady at this moment in time in many ways the short to medium term performance of the UK property market bears little or no resemblance to the underlying economic situation.

Is this trend likely to continue?

When you consider that transaction numbers in July saw the first monthly increase this year compared to 2014 it looks as though this squeeze in prices could continue. As ever the regional performances were markedly different but it is the general trend in UK property prices which is starting to concern some experts.

It was only a few months ago that all of the political parties “promised” to introduce greater numbers of affordable housing which would avert the very situation we are in at the moment. The Conservative party has been very quiet on this particular subject since winning an outright majority at the election and when you also bear in mind the time lag between starting and finishing new properties, when can we really expect this promised increase?

Growth outside of the London market

It was interesting to see that the vast majority of growth in the UK housing market is out with London and the south-east which have been prominent for many years. When you consider that the North of England saw an increase of 29% in sales growth number in the second quarter of 2015 and Yorkshire and Humberside experienced a 25% increase, this perfectly illustrates the situation.

This emerging trend may well see more and more property investors leaving the London market, where prices are at record levels, and looking for value elsewhere. If this was the case then we are likely to see a further squeeze on prices with concerns that the lack of stock for sale could continue for some time to come.

Is this healthy for the UK property market?

What we are seeing at this moment in time could be regarded as a technical squeeze with growing demand and a lack of stock for sale. It is difficult to say with any real confidence whether prices will return to lower levels as and when more stock becomes available (or demand slows) but recent growth is not built on a strong foundation. Then again, even during the worst times of the 2008 US mortgage market crisis, which shook the worldwide economy, the UK property market was still a star performer.

Despite doom and gloom forecasts about the short to medium-term outlook for UK property it does continue to go from strength to strength. Eventually the authorities will be forced to increase the number of new builds across the country but this promise could take many years to fulfil.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>