Buyers flock to market but supply shortage hits sales

IN THE year to July, the number of first-time buyers in London rose by an astonishing 109.1 per cent.

According to information released today by estate agent Haart, there has been a 27.9 per cent rise in new buyers across the country, and a 60.3 per cent increase in London alone.

Despite this surge in demand for housing, the number of new properties for sale is down by 4.4 per cent annually, adding to concerns about the supply of housing.

Paul Smith Haart’s CEO, said: “Bank of England Governor Mark Carney’s recent promise to keep interest rates at 0.5 per cent until unemployment drops to seven per cent – drawing on the US and Canadian models – is fantastic news for the property market.”

Though the news may be good for activity, Rightmove today suggests that the Help to Buy scheme, another boost to the mortgage and housing market, is also driving the demand for domestic property ahead of the supply of new homes.

Rightmove’s own research suggests that while transactions are up five per so far this year, the number of new properties coming onto the market has only risen by 0.2 per cent.

Rightmove’s director, Miles Shipside, commented: “It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices.”

Persimmon Homes and Bovis Homes, two of the major likely beneficiaries of the Help to Buy scheme both post results this week. Bovis’ shares price has climbed quickly in the past year, reaching nearly twice its level 12 months ago.

Though Rightmove found that house prices fell by 1.8 per cent between July and August so far, the group confirmed that a summer dip is common. In the 12 months to the end of August, prices rose by 5.5 per cent in total, and soared by a staggering 10.2 per cent in London, well ahead of incomes.