The number of homes for sale in Britain has reached an eight-year high, according to property search website Zoopla, which predicts this surge in supply will help moderate house price growth over the coming year.
Zoopla's latest analysis shows that there are 20% more homes on the market than this time last year. This growth comes after a period in which rising mortgage rates caused potential buyers and sellers to postpone their plans. Currently, the average real estate industry has 31 properties, up from 26 last year and just 16 in 2022, when supply was noticeably limited.
Richard Donnell, executive director of research at Zoopla, highlighted the shift in market dynamics: “There are a record number of homes for sale, indicating renewed confidence among sellers, many of whom are also buyers. Greater choice will keep prices under control in 2024.”
In recent years, real estate agents have been faced with a persistent shortage of homes to sell. During the pandemic, intense demand for more spacious living arrangements led to rapid sales, often within hours of listing. Despite a subsequent slowdown due to rising mortgage rates and market turmoil following Liz Truss and Kwasi Kwarteng's mini-budget in September 2022, supply remained tight.
This imbalance between supply and demand has led to home prices performing better than many expected in early 2023. However, Zoopla data indicates a shift, with the number of agreed sales – a key measure of demand – rising 13% year-on-year. -year in May, against a 20% increase in supply.
Donnell predicts that house prices will remain stable and end the year at a similar level to where they started. This outlook is more conservative compared to other forecasts, such as Pantheon Macroeconomics' 4% increase and Capital Economics' 3% increase.
The gap between supply and demand is especially pronounced in regions where the population has increased significantly during the pandemic. In the South West of England, for example, there are now 33% more homes for sale than a year ago, including a notable increase in the number of four-bedroom properties. Zoopla attributes this to changes in tax rules for holiday lets and second homes, in addition to the increasing trend of employers requiring more office visits.
Nationally, house prices are reportedly 0.1% lower than this time last year, although this average masks significant regional differences. In Belfast, for example, house prices have risen by 3.6% in the past year, while Ipswich has seen a fall of 3%.
The housing market is increasingly divided between the north and south of Britain, with more expensive homes in the south necessitating larger mortgages. Over the past year, house prices have fallen the most in Ipswich, Hastings and Norwich, while they have risen the most in Belfast, Burnley and Bolton. Coastal towns that gained popularity during the pandemic, such as Hastings, Brighton, Southend and Bournemouth, are now among the worst performers in terms of price falls.
Zoopla's findings suggest that the influx of properties onto the market will provide buyers with more options and help maintain price stability, a welcome prospect for both buyers and sellers navigating the changing housing landscape.
