There’s a continual balancing act taking place in the UK property market, but forecasts show housing supply is becoming steadier while transaction levels will also return to “normal”.
The country’s housing supply has been falling short when compared with the number of buyers seeking properties, but new research shows that the pressure could be about to ease back towards pre-pandemic norms.
TwentyEA has analysed patterns from property transaction data in 2022, compared with 2019, and come up with a set of predictions for how it expects the market to perform over the coming year. Overall, the outlook shows some much-needed levelling off across the sector, with growth still forecast.
Over recent years, the relative shortage of housing supply against buyer numbers has pushed prices up, and this was most notable in the aftermath of the pandemic when the market got moving again. Activity from buyers and sellers, as well as in the rental market, soared along with house prices.
Housing supply performance approaching 2019 levels
Analysis by TwentyEA has revealed that the overall housing supply in the market – based on properties for sale – has been rising, particularly towards the end of 2022.
Although supply levels were down by 4% compared with 2019, in a direct comparison between pre- and post-pandemic numbers, in the first seven days after boxing day, housing supply numbers shot up by 33% compared with 2019, providing a certain boost for the sector.
Housing supply and new home numbers can vary distinctly across the country, too. Research published towards the end of last year showed that new housing supply in the north of England exceeded its target in Q3, according to Savills.
Stuart Ducker, strategic solutions director of TwentyEA, said: “We have been in a brief period where the volume of properties for sale were at an all-time low.
“For Sale stock has recently started to rise since Boxing Day, but we are still 100k short of 2019 ‘normal’ levels. The volume of properties with ‘in flight’ transactions is currently 380,000.”
Transaction volumes to hit 1.1 million
The prediction from TwentyEA is that UK transaction volumes will end 2023 at 1,108,776. Ducker describes this as “prudently based upon the low October-December 2022 demand”, indicating there is scope for a more active market than this.
This compares to the ‘normal’ pre-pandemic market of 2014-2019, when the average annual transaction volume rate was 1.2 million per annum. Housing supply during these years also fluctuated, but generally climbed.
Ducker adds: “Average weekly net house sales in the UK in 2022 were almost identical to volumes recorded in 2019 and 2016, with 2020 and 2021 being exceptional years.”
He also expects new instructions from sellers to reach 1,500,000 in 2023 in total, which is down by 3% on 2022’s figures. But as he points out, transaction volumes are the most important figure to look at, as they drive revenue.
Snapping up properties
The ongoing shortage of housing supply is one driver behind the speed at which properties in the UK have been snapped up, with 2022 figures showing a much faster turnaround than 2019.
The data shows that in December 2022, half of all properties sold in a median of 35 days, compared with 2019 when it took half of all properties an average of 48 days to sell – which is 27% higher. This is despite December’s figure being slightly higher than November’s speedy 29-day turnaround.
Looking at average UK asking prices, this continued to rise significantly over the course of 2022, despite some tailing off towards the end of the year. Annually, asking prices increased by 8.5% in total, bringing the UK average to £404,000.
As the report notes, even if we were to see a house price fall of between 10% and 15%, this still leaves us with growth above pre-pandemic levels.
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