High sales volumes are eroding the supply of homes for sale, with stock levels down nearly 30% in April this year compared to the same period in 2017-2019 in the UK. The island specifically its around 45%. The demand/supply imbalance is increasingly focused on family houses. The value of new homes sold in the first 15 weeks of 2021 was double that in the same period in 2019. Annual price growth in the year to March continues to outperform in regions where homes are more affordable.
Demand for homes at new heights
The buyer demand has been strong since the first lockdown, leading to one of the busiest sales markets in years in 2021. The value of homes sold subject to contract in the first 15 months of the year almost double that in 2019 and 2020. Since March, demand increased further, to levels like we saw after the first lockdown; this must be due to a combination of the stamp holiday extension announcement at the start of March and the continued ‘lifestyle change people are seeking. The biggest demand boost has been seen most in family homes. Demand peaked in the week following Easter, hitting levels more than double those seen during the same period in 2017-2019. With the imminent easing of lockdown in June, it is likely to see some demand fall. However as per above, buyer appetite will still be there due to lifestyle changes and lack of options which will be sure to continue to surge the demand.
Supply limited, especially for family houses
The number of new homes being listed for has not kept pace with buyer demand in the last 12 months, eroding the total number of homes for sale in most markets, with a particular drop in the availability of family houses. In the first half of April, the number of homes for sale was nearly 30% lower than average during the same period in 2017-2019. For the Isle of Wight specifically its around 45%. The lack of supply coming to the market on the Isle of Wight is down to several factors, including the rise in demand to mainland purchasers ‘seeking better lifestyle balance’, first-time buyers who also now benefit from 95% mortgages also and Islanders themselves looking for the ‘forever home’ due to the lockdowns and evaluating their situation. There was a near 30% rise in new listings after children returned to school in early/mid March and home-schooling was at an end. This took the flow of new supply to levels typical for this time of year in 2017-2019. This wasn’t enough to fully replenish the stocks of family homes available, which remains as the most in-demand type of property. In total, houses make up 59% of listings, this year, down from 76% in 2017. Conversely, the proportion of flats for sale has risen, a trend which chimes with second-steppers looking to move from a flat into a house amid the ongoing ‘search for space’.
The tight market for family homes will limit further growth in sales volumes in the short-term. However, supply will start to build as homeowners become increasingly comfortable opening their homes to viewings, we are seeing an increase already. The supply/demand imbalance will remain. The ‘search for space’ among homeowners has further to run, especially as some office-based businesses are now confirming how their working practices will change in the longer-term. This opens up opportunities for people to relocate, meaning the Isle of Wight will remain one of the most popular relocation area’s for those looking to better their lifestyle. At the same time, the roll-out of the 95% mortgage guarantee will mean more demand from first-time buyers. UK annual house price growth was at 2.1% at the start of the first lockdown, and is now at 4% after peaking at 4.5% in January. The Island has seen around a 8.9% increase in the same timeframe. Prices should continue to grow with the ongoing demand/supply imbalance, and lifestyle relocation to the Island being a factor. We would suspect the price grown with slow towards the end of the year, especially with the ending of the stamp duty holiday.
Information sourced from "Hometrack.com"