Plummeting stock levels are keeping house prices high, for now
Mon 29 Nov 2021
Inevitable price corrections are underway in the UK property market following unprecedented rises due to the pandemic. However, the dips are slight, for now, due to extraordinarily low levels of property on the market - with Home.co.uk saying that levels of unsold property have never been so low.
According to the latest market analysis from Home.co.uk, such scarcity strongly suggests that prices will not fall far. Especially since, for the time being, a vast amount of cheap mortgage credit is chasing ever-decreasing stock. Overall, home prices slipped 0.4% since last month, thereby easing the rather frothy valuations following the COVID boom.
Arguably, too much stimulus has distorted the UK housing market. The lack of sales stock alone is unprecedented in recent times and the fact that home prices soared whilst the wider economy tanked is aberrant, to say the least. On the other hand, the rental market also appears to be highly distorted. A chronic and worsening lack of available stock (46% down on November 2020's figures) portends further rent hikes going forward.
The London lettings market is a case in point. No longer hamstrung by oversupply, this rental market now offers 54% fewer properties to let than a year ago and central London rents are really skyrocketing. The boroughs of Kensington and Chelsea, Camden and Tower Hamlets lead the charge with annualised hikes of up to 38%, more than compensating for last year's declines during lockdown.
Across most of the UK, scarcity continues to support both prices and rents. However, Scotland, Greater London and the North of England are now indicating sub-inflation growth, while the South, Midlands and Wales continue to indicate real growth for the time being. The East of England and the East Midlands remain the top performers in terms of regional price growth, with annualised home price inflation of 11.2% and 9.9% respectively, supported by considerable residual demand and low supply.
The annualised mix-adjusted average asking price growth across England and Wales edged down to +6.7% this month; in November 2020, the annualised rate of increase of home prices was 4.5% and in a rising trend.