Too Many Buyers and Not Enough Sellers is Squeezing the Market – Rics Residential Market Survey

Too Many Buyers and Not Enough Sellers is Squeezing the Market – Rics Residential Market Survey
Jul 15 , 2021

The squeeze from too many people looking for a new house and a paucity in supply continued in May, according to the latest RICS UK Residential Market Survey.

The survey found that 32% of respondents noting an increase in prospective buyers, but with a net balance of -21% of respondents reporting another fall in the number of new listings being brought to market.

In a statement, RICS said that the current sales boom was being fueled by the Stamp Duty holiday, but was now ‘turned flat’ as it came to an end.

Simon Rubinsohn, chief economist at RICS, said: “Ending a tax break always has the potential to be a little disruptive for a market but with the economy performing better than could have been expected even a short while ago and the cost of money still at rock bottom levels, the principal drivers supporting demand will remain in place even after the expiry of the stamp duty holiday. More challenging is the question of supply, a theme coming back strongly from respondents to the survey both with regard to the sales and lettings markets.”

Industry comment, as always, was varied.

Sarah Cole, personal finance analyst at Hargreaves Lansdown, said: ““Buyers are getting increasingly desperate in their hunt for a new home, as the number of properties for sale continues to dry up. The imbalance between buyers and sellers is at its worst for seven and a half years, which is a recipe for price rises and panic.”

She added: “It’s an incredibly toxic environment to buy in, because bidding wars are a classic way of ensuring you pay over-the-odds and part with more money than you can afford. Buyers need to take real care not to get carried away. You need to bear in mind that prices won’t rise like this forever, and when the market calms, you need to be happy with your decisions.”

Others were critical. Rich Horner, head of individual protection at MetLife, said the current situation was a ‘frenzy’. He added: “changes to the stamp duty holiday from June 30th may contribute to the market slow down and see buyers change tact. Demand for more space and a better work life balance has driven changes in buyer behaviours but with suggestions that a return to the office full time could happen within a few years, buyers and investors can be safe in the knowledge that rental yields and house prices in popular city centre locations will be safeguarded.”

The past year has seen an unexpected property boom in the UK, with more and more people looking to get onto the property ladder than ever before – so how can anyone looking to buy a home compete in this crowded market?

How To Buy A House In Today’s Market

Be prepared

In this type of crowded market, the best advice is to be prepared. Before you look to buy, research the area and any particular streets you’d be interested in living on, so you don’t need to spend time later. Look at listings everyday and know exactly what it is you’re looking for in a property so when you see one that fits, you can jump on it straight away. Have a mortgage-in-principle ready to go too which will speed up the process if you decide to put in an offer.

Use an estate agent / property deal sourcing co

It may not be for everyone, but it is also often worth enlisting the help of an estate agent / property sourcing co to help with your property search. An estate agent / property sourcing co will let you know of any suitable properties first before they go on the wider market, so is a great way of seeing any homes of interest before anyone else.

Look under your budget

At an average of £275,000, house prices are currently at an all-time high. Because of this, buyers are finding themselves paying way above the asking price for properties – so I’d recommend looking for properties under your budget. If you like the property so much as to put an offer in, then you can go in with a higher offer that will stand you in good stead over other people looking to buy. You’ll likely save yourself a lot of money in the process and be a frontrunner for the sale.

Act fast

It goes without saying – but act fast. Buying a home is a huge decision and one that shouldn’t be rushed, but if you view a home and fall in love with it and know the area is right for you, then put your offer in straight away. A sellers’ no.1 goal is to sell their house and get their money, and they’ll always favour a buyer who is interested and moving fast rather than one who takes their time. So always be as fast as possible.

Be flexible

Being flexible and an easy person to work with is paramount in buying a home in a crowded market. It’s important to make a seller’s life easier for them, so consider doing things like letting them pick the closing date if you can afford to do so. If you are in a property chain this will be harder to do but is a great piece of advice for first time buyers.

Stay positive

Buying a home amidst the competitiveness of the property market can be disheartening for buyers, but it’s important to stay positive. There are many things that can go wrong during the home buying process, and if something does for you then try not let it get you down. If for any reason your home falls through, there will be others that you’re sure to love just as much!

There has been an unprecedented property boom in the UK over the past year, with lockdown changing buyers’ demand, from smaller flats/houses in the cities to more spacious properties in rural locations. With such high demand, it has become more difficult for buyers to get their foot on the property ladder, but we hope these tips will help advise anyone looking to buy a property compete in today’s crowded market.