How extreme is the UK's supply and demand issue?

 
How extreme is the UK's supply and demand issue? [Photo: bjeayes via iStock]

The supply and demand issue in the UK property market has been a severe concern for some time, with buyers facing a reality wherein there is competition for every home that comes to market. It means that prices are severely inflated, and many are either having to pay over the odds to get that dream home or being priced out of the market altogether. 

But how serious is the supply and demand issue? And has the government's pledge to build a substantial number of new homes between now and 2020 helped to ease the rush for property somewhat? 

The simple answer is no. The issue has yet to be properly addressed, and in fact, despite there having been an increase in new building numbers in the last couple of years, there has also been a rise in competition for homes that become available. 

According to the latest findings from the National Association of Estate Agents (NAEA), there are now as many as 11 potential buyers viewing and trying to get their offers in for every home that comes to market. This is an increase on the ten we saw just two years ago, when supply and demand was first lamented as a serious risk for the property market. 

When there are so many buyers looking at every home, it causes a severe issue for those who are trying to buy, because they face competition from other prospective homeowners, and more often than not, if they want to secure the property, they have to put in a bid well above the asking price just to be competitive. 

And the problem is not likely to go away anytime soon, either, with the report from the NAEA suggesting that early 2017 has seen the problem get worse rather than better, as the number of buyers continues to swell and the stock levels dwindle ever further. 

The number of homes available per branch in the UK in January, the NAEA said, stands at just 38 on average. The organisation said this is a marked fall from the average of 41 that was recorded in December, and was also the lowest recorded number since July of 2016. 

This becomes a real problem when it's coupled with the fact that there are more buyers coming to market in 2017 as well. The data shows that the average number of potential buyers registered per member branch in January of 2017 was 425. This was down by some ten per cent when compared to the 386 per branch recorded in December of last year.

Mark Hayward, NAEA chief executive, said that this imbalance is causing a real rise in prices nationwide. 

"January saw a surge in buyers but competition is rife with an average of 11 buyers chasing each property. The increase in the number of properties selling for more than asking price in January could be a result of heightened interest and the fact there is simply not enough housing to meet demand," he said. 

"When the government issued its Housing White Paper at the start of February we stated how important it was for the industry to put forward robust solutions to really make a difference and it’s vital that building more affordable housing is at the very top of their agenda."