According to findings from property data and analytics company, TwentyEA, on average, there is now only 2.5 months’ worth of stock available across the UK, with the significant momentum seen in the residential property market throughout 2020 and 2021 – fuelled by the stamp duty holiday, the race for space and changed priorities - now coming to an end and a re-calibration to pre-pandemic levels anticipated for 2022.
The South West, Yorkshire & The Humber, Wales, the East Midlands and the West Midlands are the closest to running out of stock if, theoretically, no new stock came to market.
The research found that, in comparison to 2019, there has been a significant fall in the availability of all property types other than flats.
Worryingly, aside from Inner London, the whole of England and Wales at a regional level has between 2.2 and 3.1 months of property stock left to sell, the findings showed. The available months of stock are, overall, down by nearly half on historical norms.
TwentyEA believes that without a significant uplift in the volume of new instructions, the residential property market is at risk of a significant slowdown in 2022
Katy Billany, Executive Director at TwentyEA, explains: “Such a scenario in so many of the UK’s property markets is, quite frankly, a little bit scary. It’s neither sustainable or healthy, and points to a dysfunctional housing market that remains too lopsided in terms of supply and demand.”
Stock shortages in the UK residential property market are nothing new, but the problem seems to have become particularly heightened in recent years, with record low levels of supply witnessed in various areas of the country.
Billany adds: “When will all this come to a head? If the current trends continue, could it be conceivable that the whole market starts to grind to a halt as there is nothing left to sell? This then has a knock-on effect for agents, conveyancers, surveyors and so many others.”
“This is obviously the worst-case scenario, and we’re still some way off that even in the markets most at risk of a massive undersupply of new listings, but it’s not something that can be discounted completely. And we shouldn’t get complacent."
What is the forecast looking like for 2022?
With the issue of stock shortages an integral one, and many in the industry hoping that 2022 would bring a fresh intake of sellers onto the market, TwentyEA decided to look at activity across the UK in January to see what this shows us about buyer and seller sentiment compared to previous years.
Billany says: “While this was only based on the first month of the year and so can’t be used as a true barometer as to what the coming months might look like, it seems that the stock issues may be set to continue, at least in the short-term.
“The headline news is that we’ve not seen an immediate influx of new properties coming to the market in the New Year so far, although new instruction volumes were up 4% on the same period last year (when the country was back in lockdown), they were still 15% down on 2020 and a huge 17% down on 2019.”
Similarly, sales agreed were 17% lower in January 2022 than at the start of 2021, although if reports from the portals and agents themselves are anything to go by this is likely to be due to the lack of available stock rather than a change in buyer sentiment.
Billany says: “Sales agreed were still 2% up on the start of 2020 and 3% on 2019, so this could be seen as an encouraging sign for the industry. It may be the first indication that we are returning to a more normal market where traditionally demand (sales agreed) is around 75% of supply (new instructions).”
The Great Property Stock Shortage – what is going on?
The latest data makes for grim reading, according to TwentyEA. Its most recent findings, released at the end of January 2022, show for sale stock is at the lowest monthly volume since its records began in 2008, with no respite in sight for the market.
For sale stock is overrepresented by one-bed flats and also higher-priced properties, with little that has been on the market for very long. The situation appears particularly critical in the South West where, for instance, there are 10 times fewer properties for sale now than there were just two years ago.
Inside London, which until recently seemed to be bucking the trend of low stock somewhat, the situation is little better.
Billany explains: “For sale stock is at the fourth-lowest monthly volume since our records began in 2008. Four out of every five properties for sale in London are now flats and one in four properties will cost you £1million or more to buy.
“At the start of 2022, there were only 75,000 properties for sale and two of the three months that were worse were in lockdown 1.0. There is a real concern that stock is drying up at an alarming rate.”
Billany says that while those sellers already on the market might benefit from a big supply/demand imbalance, in terms of being able to negotiate a higher asking price, it’s not something that is healthy or desirable in the long term.
While stock levels fluctuate and were always bound to dip somewhat after the ending of the stamp duty holiday, there will be concerns that things could get worse in 2022, with rising interest rates, the cost-of-living crisis and political uncertainty potentially leading to a less active market.
Billany concludes: “To the casual observer, the market would appear to still be buoyant at the start of this year, but the major underlying issue of a chronic lack of supply shouldn’t be ignored and could have devastating consequences if it isn’t dealt with seriously – and sooner rather than later."
