Lots of chat especially in those hard-to-fill newspaper pages about what is driving up prices in those areas of the country that are seeing double-digit inflation. “There’re no homes for sale” say some pundits so I thought I’d check.
Using the data from HMRC on the number of sales each month across the UK and the number of new homes listed online and elsewhere it’s not that hard to check. The graph above shows what’s happening to both the number of homes for sale and the number selling – month by month. Whilst estate agents may not be as busy marketing as many homes or indeed selling as many properties as they were back in the boom of 2006/8 the numbers each month are exactly in line with the long-term average from 2003 at 100,000 sales a month. The average number each month between 2000 and 2008 was higher at 127,000 but then we know how that ended.
Online listings (those advertised on the internet is now about 200,000 less than there usually are but there are even more homes for sale than you can find advertised online as I pointed out last month. Roughly 40% more in fact.
Rising prices are down to the availability of credit. If you give people easier access to credit or make more credit available then they will take that money and give it to the owners of the finite number of homes that there are for sale. Add to that the rising number of cash buyers and one starts to see why prices are rising in some places but by no means all. Cash buyers and eager first time buyers are not interested in buying country houses in North Wales for example and here prices are about 50% of their value in 2007. In popular places prices are up 20% year on year but for how long can this continue?
Looking around there may seem to be fewer For Sale boards but that is partly because it’s not as easy to put one up as it once was and more sellers are refusing to have them outside their house. You only need to look at the results of quoted estate agents like Countrywide, Savills and Foxtons to see how well they are doing and Rightmove’s results published on Friday confirm that agents seem to be able to afford to pay enough for them to declare profits up 22% to a whopping 74% of turnover!
Those who suggest that there are too few homes for sale and few selling should look again.