Surge in UK Property Demand

Thursday, August 6, 2015
Surge in UK Property Demand

Surge in UK Property Demand

UK Property Demand Reaches 11 Year High

The number of people wanting to purchase properties in the UK has hit its highest level for over a decade thanks to record low mortgage deals, low interest rates, decent rental yields and pension reforms opening up investment opportunities for the British public

According to data published by the National Association of Estate Agents (NAEA), there was a rapid surge in property demand for purchase last month, taking demand to its highest level since 2004 – but yet again, property supply in the UK is waning.

UK property demand has increased to an average of 439 people  registered per branch demanding suitable properties for purchase, up from 383 in May 2015, according to the data.

It remains unclear as to the actual demographic of potential property purchasers, whether they are landlords seeking to increase rental property portfolios, first time buyers (FTB’s) trying to get on the property ladder or second steppers seeking more suitable properties for their needs.This increase in property demand is the highest level since August 2004, when there were 582 people searching for properties registered with estate agents.

The surge in property demand is also having a beneficial effect on the private rental sector, with an increase in tenant demand for rented property resulting in an increase in the number of prospective tenants being put forward for comprehensive tenant referencing and background checks.

There has also been an increase in the number of buy to let landlords using rent protection insurance policies to help guarantee their rental income as well as an increase in comprehensive landlord insurance to protect their property assets, which is great news for the sector.

despite the surge in demand for property, the actual supply of properties coming to market fell from the previous month However, despite the surge in demand for property, the actual supply of properties coming to market fell from the previous month to just 44 properties per estate agency branch available, compared to 46 in May.

Record low interest and mortgage rates and healthy rental yields are responsible for tempting many into the buy to let property market while pension reforms have allowed more people to enter the marketplace, forcing out a high proportion of first time buyers.

Managing Director of NAEA, Mark Hayward, said: “What we’re seeing is a market that lulled over the general election period, coming back to life in full force. Buyers are feeling more confident and those who put their plans on hold over the election and political aftermath have kicked off their hunt, causing this massive jump in demand. There’s also an impetus to buy right now in light of the impending interest rate rise as buyers fight to buy and fix mortgage rates. But the fact that demand is at an eleven year high without the housing stock to fuel it, is bad news for the market. As the gap between supply and demand widened in May, activity remained consistent, with nine sales made on average per branch for the second month running. However, the number of sales made to first time buyers declined in June, with FTB’s accounting for just 24% of sales, compared to 29% recorded in May. Although activity is still slow, it’s very promising to see that the surge in demand and dip in supply hasn’t caused activity to halt, and houses are still being sold. However, the growing gap between supply and demand is worrying and clearly demonstrates that more needs to be done to plug this. The election was full of promises to build more houses, but now those promises need to be put into bricks and mortar to respond to demand.”

The NAEA report follows the revised Centre for Economics and Business Research (CEBR) property prices forecast published a week earlier, as the CEBR forecast that UK property values would only rise by a modest 1.5% over the course of the year. But this figure has now been revised to 4.7% due to the chronic lack of properties available for sale on the open market.

Landlords are encouraged by the lack of available properties for purchase means an increased demand for tenancies, allowing landlords the luxury of only accepting the best tenants for their properties after tenant referencing checks have been completed.

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Insurance, Referencing. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.