Landmark Information Group’s quarterly property trends report has reported a fifth consecutive month of low property supply levels. Figures show new residential property listings were down by an average of nine per cent between July and September 2021, compared to pre-pandemic figures in 2019.
There has been an imbalance in the market in recent months, with demand outweighing supply. In July, new listings outpaced the number of properties ‘sold subject to contract’ (SSTC) for the first time since October 2020.
Current market conditions may have been impacted by the end of the stamp duty land tax holiday on 30 September, prior to which there was a surge of completions to meet the deadline.
In September, completions peaked at an increase of 44 per cent compared to September 2019, although July and August recorded fewer completions compared to the prior two years. However, completions were much lower in both July (-35 per cent) and August (-19 per cent) compared to 2019, illustrating a slowdown in mid-summer, perhaps due to families and professionals taking the opportunity to get away on holiday after covid-19 travel restrictions eased.
Property search order-volumes were more consistent across the quarter and were marginally higher than in 2019 – three per cent up in July, four per cent up in August and two per cent in September.
Simon Brown, CEO of Landmark Information Group, said the property industry had shown “great resilience” during the covid-19 pandemic from the challenges of lockdown to peaks in market activity “driven by the Government’s stimulus activities”.
He added: “As much of the property industry breathes a sigh of relief following the various surges in market activity ahead of the Stamp Duty deadlines, many aspects of the market are starting to present more stable figures, including SSTC, legal search order-volumes and mortgage valuations.
“We are however seeing the demand for properties continuing to exceed supply. This market imbalance has the potential to lead to depressed sales, placing increasing pressure on property prices, as sellers are able to command higher asking prices. We look to see if this adjusts as we head towards the pre-Christmas sales period.”
The report’s findings in relation to quarter three were echoed by the Bank of England Credit Conditions Survey released last week. The survey reported that borrowers sought less lending in quarter three after an increase in demand for secured prime borrowing to fund residential purchases in quarter two. It also said demand is expected to drop further in quarter four.
Despite an expected increase in interest rates in coming months, banks forecast prime borrowing costs, in terms of the mark-up or spread charged on base rates, will drop in the coming quarter after falling in quarter three of 2021.
Vanessa Rhodes, prime residential partner at Kinglsey Napley, said: “The data suggests that decisive buyers will be in a strong position in Q4. Those who are able to move quickly and beat the expected interest rate rise, should find that borrowing costs, in terms of the banks’ spread on base rates, remain at historic lows.
“Prime residential activity levels have been strong over past months and show little signs of change. Buyers who have been waiting for the right time to move on top tier property may not find conditions more favourable than they are today.”
Copyright & permissions