Published: 14/03/2022 By Lucy GoodgameAfter effects of the pandemic are still being felt in the UK housing market despite the ending of most restrictions.
If you’ve been looking to buy a home in recent months, you might already be aware that this is easier said than done. The UK property market continues to be blighted by a shortage of properties coming on to the market, whilst levels of demand continue to rise. If you see view a property and fall in love with it, chances are that there are several other buyers prepared to fight you for it.
Supply and demand of properties available for sale continues to have a direct impact on the market as would-be buyers compete for homes, driving up prices. A survey by RICS in October 2021 found that a lack of stock continues to hinder activity, with new instructions in negative territory for seven consecutive months.
Consequently, competition for property is fierce, with some agents reporting that that there are now up to twenty buyers for every property on the market; a startling figure that demonstrates just how heavily weighted against buyers the market presently is.
So, what is causing this current situation? Unsurprisingly, like most other disruptions to our lives over the past 2 years, covid is in part responsible.
The housing market went into lockdown with the rest of the UK in March 2020 of course, but despite the pandemic disrupting other areas of the economy in the long term, the property market seemed to bounce back comparatively quickly as the UK adapted to a life with restrictions. Working from home, in fact doing pretty much everything from home, was a great motivator for those wanting to buy a more comfortable home. Savvy agents quickly adapted to this demand by introducing remote viewings and focusing on polishing their online marketing strategies.
As a result, UK house prices climbed by 8.5% during 2020, according to figures from the Office for National Statistics, despite the economy floundering is most other areas. The price rises were partly fuelled by larger homes becoming more prized by the swathes of newly homebased workers, as well as by those rushing out to take advantage of the stamp duty holiday. In subsequent lockdowns, the housing market ticked along nicely whilst other industries continued to falter.
However, whilst the pandemic led to a surge in buyer demand, the restrictions limited the supply of new housing stock and made many homeowners hesitant about moving.
Brendan Wynne is the COO of Featherstone Leigh estate agents, with 11 branches in Southwest London. He attributes the current housing stock shortage to the nation’s sentiment concerning coronavirus and its knock-on impact. Whilst some vendors are keen for life to return to pre-pandemic ways, he has found that a large proportion of homeowners are still nervous about moving during these uncertain times. There is no doubt many vendors have delayed moving plans due to covid, and those that are clinically vulnerable understandably continue to feel trepidatious of viewing properties or welcoming agents or buyers into their own homes.
As well as vendor hesitancy, the situation for buyers is not improved by the current rate of housebuilding in the UK following the pandemic.
In their 2019 manifesto, the Conservative government pledged to “continue to increase the number of homes being built” and acknowledged a need to rebalance the housing market towards more home ownership. Prior to 2020/21, they were on target to achieving this with new housing supply consistently increasing year-on-year since 2013. Once covid struck, the disruption to housebuilding and supply chains meant that only 216,000 new homes were supplied in 2020/21. This is lower than the 243,000 new homes supplied in the previous year, and significantly lower than the 300,000 target.
This situation is further compounded by the ongoing labour and material shortages causing disruption across the economy. Private housebuilding output declined by 3.5% in the third quarter of 2021 according to the Office for National Statistics, with covid and Brexit both to blame for disrupting material supply chains.
While the lifting of Covid restrictions means life will return to ‘normal’ for many, the war in Ukraine and the soaring cost of living will undoubtedly have an impact. Just as England is easing into Boris Johnson’s ‘Living with Covid plan’ and the removal of most domestic restrictions, other events conspire to provide new sources of uncertainty. Property experts believe that stock shortages will inevitably start to ease up over the coming year as buyers feel more apprehensive due to geopolitical events, rising interest rates, and the ongoing cost of living crisis.
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