Supply crisis worsening, says Rightmove, as new instructions dive

The property drought has worsened with a sharp drop in new sellers.

Their numbers are down 10.6% on a year ago, Rightmove said this morning.

However, the portal reported high demand, with traffic and enquiries to agents both up 22% in June compared with the same month last year.

Rightmove also reports that asking prices for properties new to the market have hit another record high, creeping up another 0.1% month on month to stand at an average of £294,542.

The hottest demand is for small properties with up to two bedrooms.

The number of inquiries for small homes is 24% higher than for larger properties of three or more bedrooms.

However, the biggest drop-off in supply is in the typical first-time buyer sector.

Rightmove director Miles Shipside said: “The greatest mismatch between demand and supply is at the lower end of the property ladder, as no doubt many buyers in this category would like to afford to buy a larger home, but have had to accept that it is out of their reach and downsize their aspirations to increase their chances of a successful purchase.

“The forthcoming extra tax burdens on buy-to-let investors may help to tip the balance in favour of first-time buyers, but the consequent drop in rental property supply could push up rents.

“More supply of affordable starter homes for the growing demand from both renters and buyers is required, which means more new-build for both sectors to meet the country’s current and future housing needs.

“The challenge for government, planners and developers is how best to ensure the right properties are built in the right locations and at more affordable prices.”

Two agents asked to comment on today’s Rightmove both drew attention to high property investor activity in the lower price brackets.

Trevor Binch, managing director of Merrick Binch in Coventry, said: “We’re finding that any properties on the market with us at under £150,000 – so your typical two-beds or some three-bed terraced – are selling immediately.

“There are a lot of investors snapping up these types of properties, and this, coupled with the fact that a lot of sellers aren’t coming to market, is making the supply shortage worse.

“While there are some new developments being built in Coventry, there just isn’t enough to satisfy the demand, especially at the lower end of the market.”

Donald Collins, director at Go View London in Ealing, said: “The natural consequence of a growing London population, young professionals trying to get on the ladder and investors looking for long-term investments, is a big shortage of two-bed properties coming to market.

“For properties we have on between £400,000 to £700,000 half of the interest comes from residential buyers and half from investors.

“The fact that investors have a long-term focus of building their portfolio, and in many cases handing it down to their kids, means that these kinds of properties in the right locations won’t come back round on the market for about 15-20 years.”

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