The shrinking gap between demand and supply looks set to continue

The housing market in England and Wales is returning to 2019 levels, following a year of disruption and transaction bottlenecks, according to the latest market data provided by Landmark Information Group.

The newly-released Q1 Property Trends Report paints a positive picture for home-movers as supply pressures ease, and workloads normalise for property professionals, potentially decreasing property transaction times for those hoping to move this year.

With listing volumes returning to 2019 levels by the end of Q1, this shrinking gap between demand and supply is set to continue into Q2, relieving some of the inflationary pressure on house prices, the report shows.

The return to normalcy for the market is reflected in the transaction pipeline, with Sold Subject to Contract (SSTC) volumes in February and March finally matching 2019 levels, as January seller activity converted to conveyancing instructions.

Landmark reports that this more stable market is allowing conveyancing lawyers to manage workloads more effectively, in contrast to the rapid fluctuations in volumes across 2021 which contributed to huge bottlenecks and stalling transactions for home-movers across the country.

Key findings:

After a slow start to the year, beset by surging Covid-19 cases, confidence appears to be returning to the market. The year began with supply levels challenges, but a steady uptick took supply 2% over 2019 rates by the end of the quarter. This promising trend signals more choice, releasing pent-up supply from hesitant home-movers and potentially reversing the cycle we have seen in 2020-21.

SSTC volumes: A return to pre-Covid levels, with minimal fluctuation in February and March, suggests that conveyancers are experiencing steady new business after the drama of 2021’s SDLT deadline. After a quiet start to the year as a result of the supply-squeezed market, by the end of Q1 SSTC levels were at the same rate as 2019.

SSTC compared to listings: Demand and supply are broadly returning to more stable 2019 levels, with the gap appearing to narrow, potentially due to increased market confidence.

Ratio of completions to instructions: The Completion to Instructions Ratio1 (CIR) traditionally starts low at the beginning of the year, as conveyancers pick up the slack after the inevitable lull over the festive period – in Q1 2022 we see refreshing stability after a busy December.

Landmark CEO, Simon Brown, said: “As we analyse the data from the first quarter of 2022, it’s encouraging to see the beginnings of a calmer, and crucially, more consistent market. These less turbulent conditions will help to ease the pressures in the transaction process for home-movers in the next few months as increased predictability makes workloads easier to manage.

“But despite the hopeful signs, the broader factors – from the burgeoning cost-of-living crisis to geopolitical instability – are yet to fully play out. This makes it ever-more crucial that the industry is able to evolve and adapt to external shocks, to minimize the impact on home-movers.”

SOURCE: Property Industry Eye  | APRIL 20, 2022 | MARC DA SILVA

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