More buyers, but fewer homes on the market

A flurry of transactions before the end of the higher stamp duty threshold on 31 December, combined with fewer properties being put on the market over the holiday period, has left stocks of houses on the market at very low levels.

At the same time, there is evidence that many people who have shunned the housing market over the past two years want to buy in 2010, and may take advantage of the window of opportunity before the general election is called.

As the housing market enters 2010, stock levels of available properties for purchase have fallen 14% since last year, and are lower than at any time since April 2008. At the same time, visits to the FindaProperty.com website are 30% up on a year ago - with ‘sofa searchers’ watching the market and doing their preliminary research online. While they are likely to be out viewing properties more actively once the snow and ice melts, enquiries to estate agents are already up significantly, by 43% year-on- year.

With this month’s FindaProperty.com House Prices & Affordability Index showing a further decline in asking prices to £277,164, homes remain attractively priced - albeit in short supply. However, if the number of buyers in the market increases sharply (as seems likely) without many more sellers putting their properties on the market, this could be a recipe for rising prices.

At entry level, asking prices for first-time buyer properties remain stable, at just under £154,000 - the same level since last spring. However, the underwriting criteria of major mortgage lenders have become marginally easier and there is more finance available, so the ‘affordability gap’ (deposit required after first-time buyers have secured their maximum loan) fell to less than £55,500, down from £58,030 in October and almost £66,900 a year ago. The current figure represents 1.73 times gross first -time buyer annual income, compared with 2.40 in December 2008.

While overall prices fell slightly this month, there was a noticeable disparity between English cities and the country as a whole - with the market perhaps remaining more buoyant in urban areas where access is less constrained by the bad weather conditions. For example, Brighton saw prices rise month-on-month by 1.8%, Bristol 1.4%, Sheffield 1.2% and Newcastle 1.1%. Other cities with rises included Birmingham, Manchester, Liverpool, Leeds, Cardiff and Southampton.

Nigel Lewis, Property Expert at FindaProperty.com, comments: “After a slow year, there was a pick-up in transaction numbers towards the end of 2009, with some buyers taking advantage of the extended stamp duty threshold before its withdrawal on 31 December. With relatively few properties put on the market towards year end, there’s a dire need for more homes to be available to meet the clear demand from buyers, who I expect to be actively looking within the next month or two, particularly those who want to buy before the country is plunged into the uncertainty of a general election.

“Prices are fairly stable, particularly at the lower end of the market, and good quality homes are always in demand. With a growing imbalance between supply and demand, this may be a good time for those sellers who have been considering moving for some time to put their home on the market. I think they may be surprised how much interest there is.”