We reported in last week’s client briefing that all areas of the UK had seen an 80% increase in sales agreed volumes in August 2020 when compared to January 2020. With houses priced between £0.5m to £1m this increase was above 160%.
As such, we have dedicated this issue to assessing whether sales agreed growth has led to a property stock shortage.
The Overall Picture
The following chart shows the volume of property stock from January 2019 to September 2020 currently being advertised having a status of sale agreed (Sold Subject to Contract).
If we focus on the last few months, we can see that since the English property market opened in May 2020, there has been a consistent rise in the volume of stock advertised with a SSTC status. This culminates in the current month with nearly ½ million properties that are being advertised as SSTC. Historically, we have not seen this volume of properties with agreed offers or anything approaching it for a long time and you can see this in the chart since January 2019.
Does this mean that if you are a buyer, that there is a limited volume of stock for you to buy from?
The short answer to this question is no, not quite yet.
But there may be at a hyper local level or soon. Let’s examine the data in relation to stock levels at different price brackets to see what that tells us.
Stock Levels by Price Bracket
The following chart shows the percentage of property stock listed as SSTC for September 2020 and compares this with the prior year.
The first thing we notice about the chart is that without exception, all price brackets show that proportionally, there is less property to choose from now than a year ago.
A more detailed look shows that the £500k – £750k and the £750k – £1m price brackets have seen the largest rises. With the £500k – £750k price bracket, it was the case a year ago that you could look for a property knowing that over 70% of the property stock was available (For Sale). Today, that figure is only 60.5%.
Next, we will expand this level of detail and take a brief look at the Regions of the UK.
Stock Levels by Price Bracket by Region
Analysis here is a little too complex to display in a single graphic, so we have examined the data and decided to highlight the UK regions (by price band) with the highest percentage of SSTC stock in the table below.
In the two lowest price housing brackets, Scotland has the highest percentage of stock which is advertised as already having a sale agreed and in particular, within the £150k – £250k bracket, over half the stock advertised has already had a sale agreed.
In any price bracket above £350k, the South West is the UK Region with the lowest percentage of available stock to choose from if you are a buyer. However, this masks the fact that the South East and the East of England come a close second.
This article would not be complete without a brief look at our nation’s capital. The regions within the capital with the lowest levels of stock advertised but already having a sale agreed are Inner and Outer London. In Inner London now only 25.7% of the properties that are currently advertised have sales agreed. This percentage has hardly changed since last September.
Right now, London is a great place to buy, but perhaps not the best region to be selling in. A buyers’ market, whereas the rest of the UK it is very definitely a sellers’ market.
Analysis on Stock Levels
With the facts highlighted, the big question is why are higher levels of stock with an SSTC status a phenomenon we are seeing now? Also, why does it not affect London as much?
The answer of course is related to Covid-19 but is perhaps slightly more complex given its multi-faceted nature.
Summarising our thoughts, we believe there are three features at play here:
- More stock has a sale agreed status because sales agreed are rising due to pent up demand post lockdown;
- This is also more prevalent in areas of the country where you can “escape the city” by relocating or buying a second home such as the South West, South East and East of England.
2. As we explored in last week’s client briefing the stamp duty holiday benefits purchasers of property over £125k and disproportionately benefits sales in property of over £500k.
- Therefore sales agreed percentages have risen highest in the brackets from £500k to £1m.
3. We established in client briefing 38 that sales are taking longer to go through currently because of capacity constraints in the availability of resources involved in the progression of a sale from SSTC to completion. There are only so many conveyancers, surveyors and removers in the UK and right now they are as busy as they have been since the last major stamp duty change in April 2016.
But the biggest question is so what?
In our opinion, markets usually adjust quite well on their own and as such, all other things being equal, we would expect to see more property being brought onto the market or prices rising in the areas where stock to purchase is relatively low. In Inner London, we might expect to see the opposite.
This said however, conveyancers, surveyors and removers have largely fixed resources and can’t simply double their capacity overnight (keeping in mind that we reported a rise of 80% since January in sales agreed) so we would expect to see even higher volumes of advertised stock already having a sale agreed in the near future.
Whatever happens, we will continue to monitor and report in future analysis