The current lockdown is radically reducing the supply of new listings entering the market, according to the Home.co.uk Asking Price Index for February.
Less than three quarters of the expected number of new instructions materialised during January. Vendors’ hesitation is understandable amidst worrying developments in the ongoing health crisis and many sensible and responsible buyers are staying away from physical viewings altogether.
Huge drops in supply are evident in Scotland, Wales and all English regions with the exception of Greater London, where de-urbanisation continues to bloat estate agents’ portfolios.
The lack of supply means that the stock of property for sale has fallen to another long-term low and this will support prices when more normal buyer activity returns.
Indeed, Scotland, Wales and the East of England all show surprisingly large price hikes since last month (1.6%, 1.1% and 0.5% respectively), suggesting that the shortage of stock is emboldening vendors when setting the asking price.
Rapidly falling rents in the more central boroughs and the trend towards de-urbanisation means that London prices are on the back foot.
Overall averages for Greater London hide the fact that the median flat price within a 10-mile radius of the centre has fallen 5% over the last twelve months, while in prime central areas such as Belgravia, the median asking price has dropped as much as 14%. We expect prices in central areas of the capital to continue to slide in the near term.
Meanwhile, rents are rising rapidly in the regions with year-on-year changes in double figures owing to a dramatic shortage of stock to let.
Until supply increases, and this is not expected in the immediate future, rents will continue to rise sharply and this will also push up sale prices in the English regions, Scotland and Wales.
The annualised mix-adjusted average price growth across England and Wales is currently a remarkable +4.5%; in February 2020, the annualised rate of increase of home prices was just 0.9%.