The supply of housing hit a 14-year low last month whilst demand rocketed as buy-to-let investors rushed to beat the April stamp duty changes, a new report shows.
According to the National Association of Estate Agents, the number of properties available per member branch fell to 33 in January, the lowest recorded since December 2002.
Demand for housing soared in January, with an average 453 house hunters registered per branch – up 21% from December and the highest figure since July 2015.
The NAEA said the surge in activity was due to landlords pushing to complete sales ahead of the changes to stamp duty on 1 April.
Stamp duty will rise by 3% for landlords and second home owners as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers.
Under the changes, the stamp duty on a £250,000 buy-to-let property will rise from £2,500 to £10,000, while the rate for a £400,000 property will more than double from £10,000 to £22,000. The amount of tax relief landlords can claim on properties is also set to fall from April 2017.
First-time buyers
Almost a third (29%) of the total sales made in January were to first-time buyers, an increase of five percentage points from December 2015.
Mark Hayward, managing director of the NAEA, said: “Our findings this month reflect what we are all seeing across the market which is that landlords are trying to complete on sales ahead of the changes to stamp duty on additional homes in April. It continues to be a sellers’ market as demand outstrips supply.
“The number of sales made to first-time buyers has increased this month, and we should expect to see their market share rise after April. The fact that housing supply has reached a 14 year low really highlights the need for the government to push the house building programme to the very top of their agenda and help more first-time buyers make their first step on to the housing ladder.”
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
Tougher affordability checks from lenders and rising house prices have made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
A recent study by think-tank the Resolution Foundation found that the housing ladder is rapidly disappearing for most young working households on modest incomes.
According to the research, over-45s now account for three-quarters of all home owners and that only one in 10 young people are likely to be on the property ladder in 2025.
Home ownership has been falling slowly since the start of the century following a period of steady increase from the 1950s onwards and currently stands at around 63% today.
The government has introduced a number of new schemes in recent years to help those looking to buy a home, including Help to Buy and Right to Buy.
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