Widest Gap in UK Housing Supply and Demand for 7 Years

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Catherine Tilke

Money Savings Advice Widest Gap in UK Housing Supply and Demand for 7 Years

The gap between the number of prospective home buyers and those wanting to sell up is at its widest for seven years, according to a new survey from the Royal Institute of Chartered Surveyors (RICS).

The ratio of potential sellers to buyers has not been so disparate since November 2013, as would-be movers scramble to beat the stamp duty holiday deadline, says RICS.

Nearly a third (32%) of industry insiders told RICS that they had noticed an increase in the number of enquiries from buyers in May compared to April- the third month in a row that buyer interest has been on the up.

Actual sales were also reported to be on the increase, with 30% of industry insiders reporting an increase in agreed sales, though the acceleration in sales seemed to be slowing down, said RICS.

The sharp rise in buyer interest is helping to fuel rising house prices, said RICS, especially in the South West, Wales, Northern Ireland and the North West.

Stags Estate Agent Simon Cooper of Exeter said:

May proved to be another exceptionally busy month for sales activity with demand for houses ensuring that in many instances one asks for "best and final" offers and guide prices are often exceeded. Unfortunately, a shortage of supply is exacerbating the situation, and the change in Stamp Duty will have little effect.

However, just under half (45%) of those surveyed believed that house prices would continue to rise at their current rates over the short term future; this is despite the majority of surveyors (65%) agreeing that there would be some rise in house prices over the next twelve months.

The disagreement future on future demand and pricing seemed to be driven by the recent market slowdown experienced by some surveyors.

Director of Cambridge Estate Agents Pocock & Shaw, Kevin Burt-Grey, said:

It's been very busy for the last few months with a resultant increase in property prices. It's difficult to predict the market for the rest of the year, but activity has dropped off as we approach the end of the stamp duty holiday. Smaller units (one and two-bedroom apartments) are still proving slow to sell.

Meanwhile, partner at Haslams Surveyors (LLP) in Reading pointed to other incentives that could drive the boom beyond June:

Sales are slowing due to the June stamp duty cut-off. However, there are still enquiries after this date suggesting there are other factors contributing to market activity, such as cheap money and government incentives.

The Bank of England base rate, which informs the interest rates on mortgages, is at its lowest ever rate, dropping to 0.1% from 0.25% in March.

For now, this means that many prospective buyers can afford mortgages that may have been unaffordable to them in a different economic environment.

A raft of revamped and new help-to-buy schemes for first-time buyers has also been launched this year, including a 95% mortgage for certain first-time buyers, lowering the total amount needed to put a deposit on a home.

Money Savings Advice Author Catherine Tilke

Catherine Tilke

Catherine is our specialist financial news journalist. With over 7 years of experience and a raft of contacts in the financial world, she prides herself on delivering the most relevant and up-to-date financial news for our readers.

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