There’s a problem. The sellers have disappeared. Prices are rising and reports from various bodies including RICS state that they are going to continue going upward in 2016. So what does this mean and what are we finding?
Well I am not an economist and there are so many varying factors that can effect house prices that it would take an age to explain and in truth I am not even sure the experts really know themselves. All I know is that each and every market is different, every area is unique and thus every market place is individual but from what I know of our little patch of England and from what I hear from other agents from all over the country the problem is the number of homes coming to the market is desperately low, for all.
To give you an idea – in the same four month period between June and October from 2014 and 2015 our valuations (across our Bournville, Harborne, Moseley and West Heath offices) were down 34%. Houses coming to the market were down 21% across our four branches. Figures echoed by the market as a whole (in the most part).
So what does this mean?
This year has shown an increase in prices due to a lack of supply and a increase in buyers, mostly in the mid-range market place, which for us would be young professional buyers in the price range of £150,000 – £300,000. For example: Victorian terraced homes in Moseley (pictured below) jumped around 15% and above in value in a two month period at the end of last year and beginning of this year and have continued to rise. We were achieving around £200,000 for a ‘good’ two bed, with prices now jumping to £230,000 and above!
Normal market conditions over the past few years would dictate a ‘few’ properties of the same house type being on the market at any given time. Using my previous example you would expect 3,4 or 5 terraced homes on the market at any one given time. This year that has not been the case. For the most part only one has come to market at any given time, meaning a vast amount of buyers, block viewings and multi offers, sometimes going over the asking price for these homes. Hence the increase in house prices (subject to mortgage valuation of course, but we won’t go into that here!)
So where have the sellers gone?
The simply answer is we don’t know. Usual form is that people see prices rising and look to make the move up the ladder and market their homes. Not this year. The family market still needs to move for schools, work etc but again there is usually a circular effect to this meaning the change from primary to secondary schools and vice versa means a usual flow of these homes coming to the market. Again not this year.
So we now find ourselves with the following problems;
- Not enough homes for first time buyers (buyers in our areas usually buying as couples with an average age 28-38 and missing the first step on the ladder i.e. the one bedroom flat single occupier where there is still an amount of stock available and these are being bought by investors).
- Middle market sellers (as above) not seeing or finding homes they want to buy and not selling to the First Time Buyers.
- Second / Third steppers not finding the homes they want so not selling to the ‘Second Steppers’
- People down-sizing not finding enough smaller homes around so not moving and effecting the second and third steppers.
- Add this to the fact mortgage rates are low and people are recovering from a rather lengthy recession, perhaps they enjoying their low mortgage payments and staying put having learnt the lessons of pre 2008? (like me).
- New homes – well publicised figures about the lack of new homes being built.
- Birmingham has seen a sharp increase in re-locators from London (see the Independent’s article earlier this year http://www.independent.co.uk/voices/comment/im-one-of-thousands-of-people-who-left-london-for-a-better-more-affordable-city-and-i-dont-regret-it-9901199.html) and the age range of these people – 36. Prime ‘second steppers’ – making an already crowded market place even more crowded.
So where do we go from here?
Well until there is a significant shift in homes coming to the market there will continue to be an imbalance of supply and demand and prices will continue to rise. Good news for sellers or not? Time will tell where the market continues to go from here but all we know is that it will need to change significantly if the rise is to be arrested.
Hope you enjoy reading, unless of course you are an agent suffering the same issues as us or a buyer looking for one of these much sought after homes.
As always I’m happy to answers any questions you may have about your own individual needs or requirements or if you want to find out if your home, like some of the ones mentioned, has jumped in value to the same degree!
Thanks for reading and hope to hear from you soon!
Director of Rice Chamberlains Estate Agents in South Birmingham with offices in Moseley, Harborne, Bournville and West Heath
E: firstname.lastname@example.org or T: 0121 427 7442