The principle of supply and demand is the basis of every market, and the UK housing market is no different. The fact that supply is restricted by a shortage of housing is one of the reasons why homes in the UK are so expensive.
But there seems to be a sudden increase in homes for sale. Zoopla reported 21% more homes for sale in the Southwest compared to this time last year, with 17% more in London and 15% more in the Southeast.
It is possible that buy to let investors selling up, and downsizers moving down may be easing the restrictions on supply. But something else may be going on.
Worries about the economy
The rush of buyers to beat the stamp duty hike in April may have distorted the market. It may have meant the usual spring flurry came early this year, making late spring and early summer quieter than usual.
But there may be a more significant trend, with worries about the economy.
Many people are worried about high prices and future affordability. Some owners who have overstretched themselves when mortgages were cheap may be struggling now. The prospect of relief, in the form of rate cuts from the Bank of England may be looking less likely as war in the middle east and Ukraine is likely to impact oil prices, driving up inflation and dampening economic growth.
Tax increases are looking more likely, potentially putting a further squeeze on household finances.
Competition for homes may also have eased. The cost of mortgages is mainly determined by the Bank of England’s decisions on interest rates. Some buyers may be waiting for rate cuts to increase mortgage affordability, before they return to the market.
There seem to be more sellers keen to sell, even if there are fewer keen buyers. It could be time for some motivated buyers to secure a bargain.
So, what happens now?
A house price collapse is unlikely. Even with worries about the economy the underlying shortage of homes means that there is little prospect of a major fall. There have been some minor corrections. in recent months, but annual house price movement is still positive in most parts of the UK.
In the meantime, a quiet tweak to lending rules by the Financial Conduct Authority means that borrowers can get bigger loans, with smaller deposits, which will particularly help first-time buyers.
A buyers’ market?
Suddenly, buyers have more choice and are making offers under asking price.
Homes are selling for an average of £16,000, or 3%, below their asking price, according to Zoopla.
The current state of the market means that sellers should price their homes sensibly, but buyers might be able to make offers.
If a seller really must sell, they may be tempted to take it – but many will sit tight, especially if their own plans are for moving up the housing ladder.
if you are going to make an offer you need to show that it is a serious one, and that you have the funding in place to back it up.
An offer in principle is the proof you need. This is an offer from a mortgage lender based on how they view your borrowing power and showing how much they are prepared to lend. It is proof to your seller that you can raise the money to buy their property quickly.
Looking for a mortgage offer in principle? Simply call us at Continuum
Whatever your position, we can search the entire market to find the mortgage deal that is appropriate for you.
Ready to take advantage of the current supply and demand mismatch to bag a bargain? Call us today.
London has become the hardest city to sell a home | Telegraph
Zoopla House Price Index: May 2025 – Zoopla
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to a particular mortgage product and you should seek independent financial advice before embarking on any course of action.
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