Is there really a housing market slump?

(Last Updated: 29/06/2023)
3 min read

The Guardian says "UK house price growth at slowest rate in four years"

The Independent says "Housing market slumps as owners wait up to 10 months for a sale"

The NAEA says "Surge in house hunters means 11 buyers chasing every property"

You can be forgiven if you are confused about whether the housing market is buoyant or in a slump at present.

On the one hand there are claims that house price growth is slowing down, on the other you have a glut of would-be property buyers. To understand what is really going we are going to to delve deeper into the subject rather than just take on face value what the papers are saying. We need to focus on the other key drivers such as mortgage sign-ups, properties for sale and overall sales volumes.

One thing is clear: the housing market isn't following the usual supply and demand rules of orthodox economics.

The most recent data released from the UK House Price Index (Land Registry) revealed that there were 62,268 registered property sales in England and Wales in October 2016, a fall of 34% compared to October 2015. This is the 7th month of continual decline in sales volumes: this was last seen in the Autumn/Winter of 2014.

Once again London was hit harder than other regions: it saw a 44.9% decline in sales volumes year-on-year to 6,166 house sales. This was the 7th consecutive month of decline and raises alarms over the impact to the top end of the market affected by the second home stamp duty tax.

Remortgage growth eclipses new mortgage sign ups

The remortgage market is booming with year-on-year growth of 15% to 47,721, which overshadows the declining house purchase mortgage approvals of -3.9% (67,898). This is strong evidence that many home owners are choosing to 'dig in' and secure beneficial mortgage rates following the fall of the base rate to 0.25% in August last year.

The knock-on effect will hit the first time buyer market however because members of this group are crying out for more properties to buy, especially following the NAEA's most recent report.

In 2009 we moved home every 15.8 years, it is now 17.5 years

Surge in house hunters means 11 buyers chasing every property...but what about the fall in properties to buy?

The NAEA's housing market report highlights a glut of buyers looking to buy, however the number of available properties to buy in January was at its lowest since July 2016. This level of competition will only aid in pushing up house prices as the war of the offers rages with what little properties there are for sale.

New home starts on the up, completions on the down

New housing starts had a surge in the last quarter of 2016 with 41,620 new homes started, taking the total number of starts for 2016 to £153,800 (up 5% on 2015). The sad news for buyers is the decline in completions in 2016: these fell by 2% to 140,880; a far cry from the estimated 250,000 needed to meet the demand for new buyers.

Andrew Boast, Co-founder of SAM Conveyancing said: "2017 was set to be the year of the buyer with many experts anticipating a sharp fall in house prices making properties more affordable. With 11 buyers chasing every property, it is clear that the buyers are doing their bit and showing their intent. The overriding challenges remain the limited stockto choose from along with second home movers digging in and remortgaging and the huge and growing gap between the desired and actual number of house completions, the housing market is stuck with a high and rising demand for property and ever-increasing house prices.

We wait to see the effects of the new year on the housing market next month, however we expect to see much of the same as house prices continue to rise, regardless of factors which should normally influence them.

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Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
Reviewed by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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