National Inventory Of Homes For Sale Hits All-Time Low

[rantnrave]

From EAToday

The national inventory has hit an all-time low, property search engine Home has reported.

It says the overall volume of property for sale is now 38% lower than six years ago in December 2007.

It says the “supply crisis” is frustrating in the hottest regional markets which show no sign of rebalancing.

According to Home, which takes property listings from virtually every single estate agency website and portal in the country, there are 481,000 properties currently for sale. In late 2007, there were 771,000.

It says that the monthly flow of new property into the UK market has fallen by 16.9% in the last year and by 61% since 2007. Even in the north-east, where fresh stock supply has risen, it has gone up only very marginally, by 0.7% in the last 12 months.

The site claims that “new stock has all but disappeared in London”. Here, it says, the volume of new properties has dropped 28.5% in the last year and is down 74% from 2007.

Director Doug Shephard said of the London sector: “Any market that contracts by over 20% in just one year is showing signs of distress.”

He said of the market as a whole: “With such a low volume of properties for sale, there are concerns about how the market will cope with the impending upturn in buyer interest in early 2014.

“On the demand side, individuals and investors have access to relatively cheap credit and yet, due to the sheer lack of choice, the number of transactions that can actually be realised is very much restricted.

“Growing demand and diminishing supply will no doubt place further pressure on prices in the coming months, especially in London and the south-east.”

According to Home, the average asking price in England and Wales now stands at £246,781, down 0.1% on November and up 6.1% on December last year.

Things usually go quieter at this time of year anyway. Is the rest due to sellers thinking they'll get 20% more in January?

[BlokeInDurham]

Not just the rise of the amateur landlord, never selling a house but renting it out instead?

[slacker]

An added dimension to all of this will be that so many existing borrowers have ended up on a low rate now.

Whether they want to size up/down many will have to renew loan terms.

Carney has indicated he's going to start using loan terms to tighten any HPI.

We might find a lot of people not locked in by negative equity but locked in by unfavourable borrowing environment.

People on 4X earnings / 90% LTV borrowing hoping they could go to 4.5X to upsize may find they only have 3X on offer at 70% LTV on a renewal.

If Carney pulls this off - leaving IR low for businesses and lowering HPI ceiling with borrowing constraints - it could be quite a historic change.

[rantnrave]

An added dimension to all of this will be that so many existing borrowers have ended up on a low rate now.

Whether they want to size up/down many will have to renew loan terms.

Carney has indicated he's going to start using loan terms to tighten any HPI.

We might find a lot of people not locked in by negative equity but locked in by unfavourable borrowing environment.

People on 4X earnings / 90% LTV borrowing hoping they could go to 4.5X to upsize may find they only have 3X on offer at 70% LTV on a renewal.

If Carney pulls this off - leaving IR low for businesses and lowering HPI ceiling with borrowing constraints - it could be quite a historic change.

Don't Basel III lending restrictions kick-in early next year too?

[Bloo Loo]

Don't Basel III lending restrictions kick-in early next year too?

no, it means early kick-ins are not to be before 6AM...dispossessions are such a nasty business.

[The Masked Tulip]

An added dimension to all of this will be that so many existing borrowers have ended up on a low rate now.

Whether they want to size up/down many will have to renew loan terms.

Carney has indicated he's going to start using loan terms to tighten any HPI.

We might find a lot of people not locked in by negative equity but locked in by unfavourable borrowing environment.

People on 4X earnings / 90% LTV borrowing hoping they could go to 4.5X to upsize may find they only have 3X on offer at 70% LTV on a renewal.

If Carney pulls this off - leaving IR low for businesses and lowering HPI ceiling with borrowing constraints - it could be quite a historic change.

I think there are lots of people still on IO mortgages but if they move they will have to go to repayment and they simply cannot afford to do so.

[ElPapasito]

This lack of supply is one of the most noticeable aspects of the post-crunch UK housing market and therefore poses the biggest question. Why has there been such a marked lack of supply? They keep reporting it but very few speculate on why it is happening:

FACTORS INCREASING SUPPLY:

1. Lowering real wages creating mortgage repayment difficulties creating forced sellers

FACTORS DECREASING SUPPLY

1. (Recently) expectation of future HPI gains delaying potential sellers
2. Valuations being in negative equity territory locking people into current location
3. Banks not repossessing non performing mortgages (to avoid crystallization of loss on their books)
4. BTL culture spreading into 'inherit to let' on deceased parent's homes?
5. Low wages and savings preventing potential second steppers moving up
6. Low new build numbers
7. Poor jobs market meaning less relocation churn in sell to buy

Any others?

Clearly the supply constricting factors are dominating.

[crashmonitor]

I've just walked from the centre of Nottingham six miles out to Burton Joyce, doing a count as I went on.....11/30 SSTC. As mentioned on another post, that is a surprisingly high amount sold in the run up to Christmas and a surprisingly low number of properties for sale over a long distance.

[rantnrave]

At what point do EAs start to panic?

[crashmonitor]

At what point do EAs start to panic?

I'm guessing 30% of half a million stock sold is a better place to be than 15% of 750,000....which is where we have been since about 2007.

[Wurzel Of Highbridge]

At what point do EAs start to panic?

I thought Estate Agents were a growing industry - Wasn't the biggest growth in the jobs market estate agents?

http://www.telegraph.co.uk/finance/jobs/10301646/Estate-agent-hiring-boom-helps-drive-jobs-growth.html

A hiring boom among estate agents on the back of rising house prices helped drive a resurgent jobs market in the three months to July, according to official figures.

Unemployment dropped to 7.7pc, from 7.8pc in the three months to April, as 80,000 jobs were created over the period. Economists had expected employment to rise by about 55,000, but a 10pc surge in the “real estate” workforce in the second quarter helped deliver the better-than-expected result.

[The Masked Tulip]

Several EAs around my way are gloating that next year HPs will shoot up higher due to the dearth of supply.

I didn't have the heart to tell them that if they do not get new supply many of them will be out of a job. A few of the brighter ones have already cottoned on to this.

[Wurzel Of Highbridge]

Several EAs around my way are gloating that next year HPs will shoot up higher due to the dearth of supply.

I didn't have the heart to tell them that if they do not get new supply many of them will be out of a job. A few of the brighter ones have already cottoned on to this.

Why would estate agents be happy if prices go up?

If you sold cars and the manufacture hiked the price by 10% for the same old model would you be a happy sales man?

[zugzwang]

This lack of supply is one of the most noticeable aspects of the post-crunch UK housing market and therefore poses the biggest question. Why has there been such a marked lack of supply? They keep reporting it but very few speculate on why it is happening:

FACTORS INCREASING SUPPLY:

1. Lowering real wages creating mortgage repayment difficulties creating forced sellers

FACTORS DECREASING SUPPLY

1. (Recently) expectation of future HPI gains delaying potential sellers
2. Valuations being in negative equity territory locking people into current location
3. Banks not repossessing non performing mortgages (to avoid crystallization of loss on their books)
4. BTL culture spreading into 'inherit to let' on deceased parent's homes?
5. Low wages and savings preventing potential second steppers moving up
6. Low new build numbers
7. Poor jobs market meaning less relocation churn in sell to buy

Any others?

Clearly the supply constricting factors are dominating.

5. Low wages and savings preventing potential second steppers moving up

^

this, primarily.

High prices + living costs have put the next rung of the ladder out of reach.

[zugzwang]

Why would estate agents be happy if prices go up?

If you sold cars and the manufacture hiked the price by 10% for the same old model would you be a happy sales man?

Because in a free market price increases are generally synonymous with recovering sales.

[terryturbojr]

5. Low wages and savings preventing potential second steppers moving up

^

this, primarily.

High prices + living costs have put the next rung of the ladder out of reach.

My thoughts too. It's probably as hard to move into a second step home than it is for a first time buyer. Could this with low rates and forbearance and there's low supply, either forced or from someone wanting to somewhere bigger.

[janch]

The cost of moving is high too:

estate agent fees

legal fees

stamp duty

removal company etc

most of these have gone up disproportionately in the past few years

[Parkwell]

He said of the market as a whole: “With such a low volume of properties for sale, there are concerns about how the market will cope with the impending upturn in buyer interest in early 2014.

Simple. Most people will look at the market, decide everything is too expensive, too crap, or both, and wait till next year.

At least I hope they will. That's what I keep doing.

[Fromage Frais]

This lack of supply is one of the most noticeable aspects of the post-crunch UK housing market and therefore poses the biggest question. Why has there been such a marked lack of supply? They keep reporting it but very few speculate on why it is happening:

FACTORS INCREASING SUPPLY:

1. Lowering real wages creating mortgage repayment difficulties creating forced sellers

FACTORS DECREASING SUPPLY

1. (Recently) expectation of future HPI gains delaying potential sellers
2. Valuations being in negative equity territory locking people into current location
3. Banks not repossessing non performing mortgages (to avoid crystallization of loss on their books)
4. BTL culture spreading into 'inherit to let' on deceased parent's homes?
5. Low wages and savings preventing potential second steppers moving up
6. Low new build numbers
7. Poor jobs market meaning less relocation churn in sell to buy

Any others?

Clearly the supply constricting factors are dominating.

Its the same for hotels and commercial property.

Cant sell wont sell

Would love to see what the prices for houses would be if the lending was the same terms as commercial.

I think they will raise rates to get things moving as their low rates have zombified everything.

[Fromage Frais]

My thoughts too. It's probably as hard to move into a second step home than it is for a first time buyer. Could this with low rates and forbearance and there's low supply, either forced or from someone wanting to somewhere bigger.

100m2 square 3 bed apartment I am in with garage 180,000

4 bed house 150m2 = £350,000+ and the extra 50,000 just appeared in the last 12 months

[winkie]

Not just the rise of the amateur landlord, never selling a house but renting it out instead?

Yes that, and to move up you require to have repaid a big chunk of existing mortgage debt, have money/equity/pay rise..

...to move down you need someone to buy what others obviously do not want to buy, often because the price is too high, taking into account ESTATE AGENT FEES and other costs including STAMP DUTY....many people find it is easier to stick and withdraw the equity to spend without the high buying and selling costs.

...also there are not enough homes at the right price on the market in the right places that people want to invest a huge chunk of their indebted life into, they may not be able to sell it again when they need or want to....why buy over priced rubbish when you don't have to.

[Wurzel Of Highbridge]

How would that get the market moving?

Rates go up, then Repos come to market. In other words when you increase interest rates you increase the velocity of money.

I think the prediction of rates beginning to rise is correct as the Bankers will make money on the way up and down. At this point there is little money to be made at the bottom, so they can raise rates and make a killing from interest on debts and buying cheap property that unfortunates lose.

Of course the raise in rates will be China, Russia, the bogey man's fault as governments wouldn't inflict interest rates on their own people willingly, would they?

Anyway talking about inventory, there seems to be a glut of planning permissions going through - does anyone have any solid info on this?

[winkie]

How would that get the market moving?

....what was wrong with lower prices but slightly higher interest rates, helps lower inflation....it worked before....people saved more and could put down larger deposits.....therefore had less debt to repay, prices of imports fell, fuel cost less, people had more real money to spend.

[Goat]

I think there are lots of people still on IO mortgages but if they move they will have to go to repayment and they simply cannot afford to do so.

Think HonestEA covered this in his anecdotals thread.

Basically vast numbers of people bought 2006-08 (I'd say 2004-08) at peak or close to peak prices and simply have too little equity to move.

[Wurzel Of Highbridge]

The way I look at it is when the bankers have squeezed all they can out of low interest rates, it will go into reverse and everyone will be squeezed with high interest rates. Whether this is orchestrated in the boardrooms of large banks or just a natural conclusion to a cycle is another discussion.

The problem for the banks is offloading assets that will depreciate with rising interest rates (Leveraged things like London Property) and buy up cheap assets that gain value with rising interest rates (Stocks, commodities, consumer staples.) IMO that is why London property is being offload em mass to our Asian friends.

I am of the opinion that when interest rates are too low it causes [wage] deflation. Financing costs for mortgages and goods are reduced when interest rates are held down so workers do not demand such high wage increases as they are not under threat of being evicted. If rates were back at normal levels, debt repayment then becomes a burden and people demand higher wages or they will be on the streets. This demand for higher wages feeds back into product prices, thus causing general inflation and causes banks to raise interest rates in a vicious cycle.

The banks & governments pick winners and losers all the way.

Anyone care to disagree?