Supply of family homes for sale falls to five-year low
The pandemic has fuelled buyer appetite for more space, leading to a sharp drop in the number of three and four-bedroom houses on the market.
The level of family houses for sale has hit a five-year low as buyer demand for properties offering more space significantly outstrips the supply of homes on the market.
The number of four-bedroom homes for sale has dived by more than 20% year-on-year in all regions of the UK, with Scotland seeing a near-60% fall.
The availability of three-bedroom properties is also down across the board, with northern regions the most affected.
Three-bedroom homes now account for just a quarter of all properties listed for sale, down from more than a third in 2017.
Overall, houses account for 59% of listings, compared with 76% four years earlier.
Why is this happening?
There is a mismatch between the level of homes for sale and buyer appetite across most of the market.
Home buyer appetite is up 27.5% so far this year compared with average levels in 2020.
Meanwhile, the total number of homes listed for sale in the first months of this year is 19% down on the 2020 average, despite the 50-day closure of the housing market in England (and longer in Wales and Scotland) last year.
But the situation is particularly acute for three and four-bedroom houses due to the pandemic-led ‘search for space’.
Family homes remain the most in-demand type of property, but the desire for them is not being matched by new listings, leading to dwindling volume of the properties on estate agents’ books.
What’s the background?
All regions have seen at least a 20% fall in the availability of family homes. Scotland has seen the biggest drop in four-bedroom properties, with listings diving by 58%, followed by the south west at 42% and the north west and south west at 42% and 40% respectively.
Northern regions have also seen a sharp fall in the availability of three-bedroom homes, with Scotland, Wales, the north west and the north east most affected, along with the south west.
What could it mean for you?
With buyer demand very strong, if you are thinking of selling a property, particularly a three or four-bedroom house, you could be in pole position to agree a sale.
And with the tight supply of family homes for sale, your property could stand out if you list it now.
Visit My Home to get an estimate of how much your property is worth and contact a local estate agent to get a full valuation.
The good news if you’re a buyer is that the tide is turning when it comes to the supply of homes for sale. Our data suggests that more properties have started coming onto the market since schools restarted.
This trend is expected to continue as lockdown measures are further loosened and sellers feel more confident about opening up their homes for viewings.
You could still take advantage of the stamp duty holiday on homes costing up to £500,000 if you start looking now.
But you are likely to face stiff competition for family homes, so register with us to receive alerts when a property meeting your criteria comes onto the market to help you get ahead.
While properties are moving quickly from being listed to ‘sale agreed’ stage, the time it takes to complete, when ownership legally changes hands, is still taking longer than before the pandemic.
So it’s worth preparing as much as you can in advance to increase your chances of benefitting from the stamp duty holiday.
Head of research, said: “The imbalance between supply and demand, which is creating a very tight market for family homes, will start to ease in the near term as homeowners becoming increasingly comfortable opening their homes to viewings, in turn building supply of new stock.
“The scale of buyer demand will also moderate from the peaks seen after Easter as lockdowns end across the country and there is some return to pre-pandemic normality.”
But Gilmore adds that the fundamental imbalance will remain, with the search for space among homeowners set to continue, particularly as some office-based businesses are now confirming their working practices will change for the longer-term.
Top three takeaways
- The supply of family homes for sale has hit a five-year low
- The number of four-bedroom homes on the market has dived by more than 20% year-on-year in all regions of the UK, with Scotland seeing a near-60% fall
- The supply of three-bedroom properties is also down across the board, with northern regions the most affected
Revealed: where buyer appetite for three-bedroom houses has soared the most
Thinking of selling your three-bedroom house? There is likely to be a high level of interest in it, particularly if you live in one of these areas, according to our research.
Buyer demand for three-bedroom houses has doubled in some locations during the past year as the pandemic-induced search for space continues.
Braintree in Essex has seen the biggest surge in buyers looking for one of the properties, with demand soaring by 107% year-on-year, according to our research.
There are also twice as many buyers searching for a three-bedroom house in Monmouthshire in Wales as there were a year ago, while demand is 96% higher in Knowsley in Merseyside, and 90% up in Northampton.
Breckland in Norfolk, East Northamptonshire, Gedling in Northamptonshire, and Northumberland have all also seen an increase of 85% or more in the number of buyers searching for a three-bedroom house.
Selby in North Yorkshire and Sedgemoor in Somerset make it into the top 10 ranking of locations that have seen the biggest growth in buyers looking for a three-bedroom house too. Appetite in these areas has risen by 78% and 77% respectively.
Other areas that made it into the top 20 ranking are Kingston upon Hull, York, Brentwood, North Tyneside, Eastleigh, Stockton-on-Tees, Bromsgrove, Barnsley, Redcar & Cleveland, and Havering in London.
But the growth in demand for these properties has not been matched by an increase in the supply of three-bedroom houses for sale.
All of the top 20 locations that have seen the biggest increase in buyers interested in a three-bedroom house have seen a fall in the number of these properties listed for sale, apart from Stockton-on-Tees, where supply has risen by just 4%.
Selby has seen the biggest drop in the number of three-bedroom homes on the market, with these falling by a third, followed by Braintree at 32% and Knowsley at 27%.
Why is this happening?
Three-bedroom houses are attracting the largest levels of home buyer demand across the country.
While the overall rise is being driven by lockdown-weary people looking for more space, there are a number of trends making individual locations particularly popular.
Many of the places in the top 20 are good commuter locations due to their proximity to regional cities, including Knowsley, Gedling, Selby, North Tyneside and Bromsgrove.
Others, such as Northampton, Monmouthshire and Sedgemore have good connectivity through motorways and railway links.
The more rural locations may also have seen an uptick in demand due to people wanting to move to the country as a result of the pandemic.
Finally, affordability is also likely to be a driver, with the cost of three-bedroom homes in Hull, Barnsley, Knowsley, Breckland and Havering, in London, an average of 20% below the regional average.
Who does it affect?
The surge in demand for three-bedroom houses is good news if you own one of these properties and are thinking of moving. There is likely to be a high level of interest in your home, particularly if you live in one of the areas in our list.
Given the constrained supply of these properties for sale, if you list your home now, it is likely to stand out. You could also be a in a good position to benefit from the extension of the stamp duty holiday on your next home.
You can find out how much your home could be worth on Zoopla, with an instant online estimate based on market data. You can also track your home and other properties you’re interested in so you’re ready to move when the time is right.
If you are looking to purchase a three-bedroom property, our research suggests you are likely to face significant competition from other potential buyers.
So it is important to be organised and be prepared to make an offer quickly if you see a home you like.
What’s the background?
Despite the supply constraints, there has still been a significant increase in the volume of sales of three-bedroom homes.
The number of these properties changing hands has soared by 120% in Stockton-on-Tees, while sales are 84% higher in Sedgemoor and 66% up in Redcar and Cleveland.
Our ranking is based on the locations in Britain where there's been the largest growth in buyer demand for three-bedroom houses in the first three months of the year compared with the average for 2020.
Top three takeaways
- Demand for three-bedroom houses has doubled in some locations during the past year as the pandemic-induced search for space continues
- Braintree in Essex has seen the biggest surge in buyers looking for one of the properties, with demand soaring by 107% year-on-year
- All but one of the top 20 locations that have seen the biggest increase in demand for three-bedroom houses have seen a fall in the number of the properties listed for sale
Value of UK homes sold doubles as pandemic-led search for space continues
One in 50 homes has changed hands since the start of the year, our latest House Price Index shows.
The value of homes changing hands has nearly doubled in the first 15 weeks of this year compared with the same time period in 2020.
One in every 50 homes was sold subject to contract between 1 January and 15 April, up from one in every 100 homes a year earlier, according to our latest House Price Index.
Overall, properties collectively worth £149bn have been transacted during this time period, a level that would not normally be reached until the end of June, as the pandemic-led search for space continues.
Glasgow, Bristol, Nottingham, Stoke-on-Trent and Middlesbrough are the five busiest housing markets.
What's happening to house prices?
Annual house price growth tracked at 4% in March, down from 4.5% in January. While this indicates a slight softening in the pace of growth, it remains nearly double the 2.1% recorded for the same month last year.
Northern regions, where affordability is less stretched, continued to see the biggest increases, with Wales leading the way with a rise of 5.9%, followed by Yorkshire and the Humber at 5.3% and the north west at 5.2%.
By contrast, in London, which has the highest average house price for any region, annual growth was just 2%.
Cities in northern regions also logged the biggest price gains, with Manchester and Liverpool retaining the top spot at 6.5% and 6.3% respectively, followed by Leeds, Nottingham, Leicester and Sheffield, which also saw rises of 5% or more.
At the other end of the scale, prices fell by 1.7% in Aberdeen, as the city’s property market continued to be impacted by the fall in the oil price, while Oxford and Cambridge, which have high average house prices, recorded relatively muted growth of 1.6% and 2% respectively.
How busy is the housing market?
Home buyer appetite peaked in the week following Easter, when it was running at double the level seen in the comparatively normal markets of 2017 to 2019.
It is currently 27% higher for the year to date than in 2020 as the stamp duty holiday continues to stoke demand.
There has been a slight slowdown in interest from potential buyers since lockdown was eased on 12 April, as households focus on catching up with friends and family and enjoying leisure amenities that have not been available since January.
The intense activity has led to a sharp drop in the number of homes on the market, with supply in the first half of April nearly 30% below the levels recorded for the same time period in 2017 to 2019.
Furthermore, the total number of homes listed for sale so far this year is 19% lower than average levels recorded in 2020, despite the 50-day closure of the housing market in England (and longer in Wales and Scotland) last year when little-to-no homes were put up for sale.
The third lockdown also saw an increased lag time between homeowners looking for a new property and listing their current home for sale, further exacerbating the imbalance between supply and demand.
That said, the tide does appear to be turning, with evidence suggesting listings have started to rise again since schools re-opened six weeks ago.
What could this mean for you?
First-time buyers
A rising number of first-time buyers are coming to the market, buoyed by the government’s new mortgage guarantee scheme and the return of mortgages for people with only small deposits.
Aspiring homeowners can also still take advantage of the government’s Help to Buy equity loan for new-build homes – as well as first-time buyer stamp duty relief.
The situation is putting pressure on already constrained levels of properties for sale, although availability is better for flats than it is for family homes.
Even so, competition is likely to be intense, and buyers will need to move fast when they see a home they like.
Homeowners and landlords
As the pandemic-triggered search for space continues, three and four-bedroom houses remain in high demand.
It means that homeowners and landlords who are considering selling a family home are likely to be in a prime position.
But they may face a shortage of choice when looking for a new property to buy.
However, as more homes come onto the market now that schools have re-opened, the choice is set to improve.
And homeowners and landlords preparing to buy a new property now could still be in a position to take advantage of the stamp duty holiday.
What's the outlook?
The imbalance between the supply of homes for sale and buyer demand will start to ease in the near-term as homeowners become increasingly comfortable opening their homes for viewings.
The scale of buyer demand is also expected to moderate as the roadmap out of lockdown continues and there is some return to pre-pandemic normality.
head of research, explained: “The fundamental imbalance will remain. Demand will remain strong as 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.
“More flexible working arrangements open up new opportunities for homeowners to move to a further-flung location.
“At the same time, the roll-out of the 95% mortgage guarantee will mean more demand from first-time buyers, fuelling demand without replenishing supply.”
House price growth is also expected to ease as the extreme imbalances between supply and demand start to unwind, while the end of the stamp duty holiday and the paring back of government support over the summer will also act as a drag on the market.
That said, property values will continue to be underpinned by the shortage of homes for sale, with growth likely to be strongest in the more affordable markets in the north and Midlands.