Asking prices surge as demand overwhelms supply
The escalating property drought has seen house prices and rents leap by 1.4% since last month, pushing annualised growth up to 4.8%, as stock shortages force up prices outside of the capital.
According to the latest data and market analysis from Home.co.uk, house prices look set to go ballistic in the regions as demand looks set to completely overwhelm the little supply there is.
The latest lockdown has radically reduced the supply of new sales listings entering the market. Less than three-quarters of the expected number of new instructions materialised during January and February making stock levels fall to a new all-time low. Vendors are likely to return to the market in greater numbers as the lockdown is rolled back. However, Home suggests that, in their view, it is unlikely that the supply of properties for sale will be sufficient to meet demand outside of Greater London.
De-urbanisation continues in Greater London, as evidenced by the glut of available rental properties, especially in the more central boroughs. The exodus looks set to continue and we expect a flood of new instructions from homeowners and landlords to swell estate agents' already large sales portfolios over the coming months.
The data shows that London prices are already 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 7% over the last twelve months, while in prime central areas such as Belgravia the median asking price has dropped as much as 15%. We expect prices in central areas of the capital to continue to slide as rental yields collapse despite the recently announced market stimulus measures.
In stark contrast, rents are rising very rapidly in most of the regions with year-on-year growth reaching 20.5% in the West Midlands. Such phenomenal rises are due to an acute shortage of stock to let. We do not expect supply to rise to meet demand in the immediate future, and therefore rents will continue to inflate. This will also help to push up sale prices in the English regions, Scotland and Wales as yields improve for prospective investors.
The annualised mix-adjusted average asking price growth across England and Wales is currently +4.8%; in March 2020, the annualised rate of increase of home prices was 1.8%