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Housing demand fluctuates but levels are above average
Property market analysis from Q1 reveals the cities of Birmingham, Liverpool and Leicester reported the highest levels of housing demand. According to Zoopla, buyer demand is 118% higher in comparison to the same period in 2017-2019. Interestingly, the average house price in these cities is under £200,000.
Levels of Demand Ease, as Lockdown Restrictions are Lifted
Many of you will be wondering how much longer this extreme housing supply and demand imbalance will persist. Demands peaked during the Easter period. In fact, levels of demand doubled in comparison to the same period in April 2017 and April 2019. However, shortly after, reports show a dip in the remarkably high levels of demand. This is due to the relaxation of lockdown restrictions on April 12th.
As a result of easing restrictions, people shifted their focus from home priorities to catching up with family and friends. Naturally, this drop was anticipated as people start to take advantage of the local amenities and outdoor restaurants. All of which they were deprived of throughout the year. Although housing demand will remain above average through Q2 in the property market, it is likely to steady as the restrictions ease.
Lack of Housing Stock – What’s the Cause?
Inadequate levels of housing supply are coming to the market. The lack of housing stock has been aggravated by several factors. This includes the influx of first-time buyers entering the market. As a result of the government support schemes, the property market is experiencing an increase in activity from first-time buyers. However, it is important to note, many first-time buyers have nothing to sell. Therefore, activity is high, but housing stock remains sparse. Nevertheless, activity from first-time buyers will only increase as we head into the initial stages of the 95% mortgage guarantee scheme.
Additionally, in the midst of the pandemic sellers were hesitant to open their houses for potential viewings, therefore did not proceed to sell. However, this did not stop them from browsing other properties. The re-opening of schools has led to the end of home-schooling. As a result, the market has witnessed a 30% increase in new listings. Causing levels of housing supply to curve to an average.
Without a doubt, many factors are contributing to the undersupply of housing and soaring levels of demand. Although the market difference may resume to a moderate level, we predict the gap will remain. Besides, as businesses plan their return to work, many have confirmed long-term working flexibility. Allowing employees to work from home as well as the office. However, this will add further pressure on the demands for ‘more room’, as people look to incorporate home offices in their spaces.
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