Is a lack of supply hampering first time buyers?

Is a lack of supply hampering first time buyers?

The overall value of British property may have recently hit a new milestone high, but according to reports, the volume of stock available has been plummeting over the course of the last ten years, reaching new lows towards the end of 2015, as people choose to stay put rather than selling and moving home. 

Recently, a report claimed that the overall value of property in the UK had reached a new peak of some £6 trillion, but according to new data released by the National Association of Estate Agents (NAEA), the number of homes available has been falling for some time. Is this potentially hampering first timers and their attempts to get onto the property ladder?

The NAEA report states that in December 2015, the volume of homes for sale in the UK dropped as low as 37 on average per branch of estate agents. This was the joint lowest of the year, tied with September, and far below the 45 that was recorded a year before in late 2014. 

However, it's when this data is compared to that from ten years ago that we see just how problematic it can be for first timers to try to get onto the property ladder in this day and age. 

In December 2005, the number of homes for sale hit 72 per branch, almost double that seen in the final month of last year. And this came at a time when demand for homes was also far lower than it is now. In December 2005, the average landlord had 302 potential buyers registered per branch, compared to 374 in 2015. 

What this means is that buyers are now facing more competition than before. With available stock so low and the number of potential buyers so high, there can be fierce bidding wars sparked when it comes to purchasing a property. This can often see first timers priced out of the market, meaning they have to stay in rented property for longer than they had originally intended to. 

Mark Hayward, NAEA managing director, pointed out that more homes are needed to help newcomers to the market in getting themselves a footing on the property ladder. 

"The number of home buyers on the books has been gradually increasing. When there is such a huge and widening gap between supply and demand, a level playing field seems further out of reach for many would be house buyers.

"The issue of lack of supply needs to be solved, but it isn’t going to be done anytime soon. We are still waiting to see new homes being built and whilst we wait, house prices continue to rise," he said. 

However, it's not all doom and gloom for new buyers in the market. Mr Hayward said that from April, there may be the possibility that demand from investors falls, bringing about more opportunities for newcomers to get themselves properties. 

"There is some potential light for first time buyers however, once the new tax rate increase in April is in place we may see less investment from buy to let or second home investors, which may mean less competition for first time buyers," Mr Hayward said.