Suffolk/Essex: Shortage of housing driving up prices in East Anglia
06:00 14 February 2014
Property prices in East Anglia are likely to increase as a continuing rise in demand outstrips supply, according to the latest property report from the Royal Institution of Chartered Surveyors.
The survey of the UK residential market in January concluded that falling stock levels would continue to drive up prices.
In East Anglia residential property prices are highest outside of London and the South East, as was the average sales to stock ratio – 50% compared to a national average of 35%.
The sales to stock ratio is the level of sales compared to the number of properties estate agents have been instructed to sell.
Essex spokesman for the National Association of Estate Agents, Richard Hair, said house prices were increasing by around 6-7% per year in the county.
He said: “ Supply is not meeting demand because there are more people wanting to purchase a property. Because there is upward movement in prices people are more confident that the value of their property will have gone up in a year’s time. The supply side has not really changed a great deal.”
In Colchester, Alan Williams, a managing partner at estates agents Fenn Wright, agreed that demand for housing was being driven by a general recovery in the economy.
He said: “It’s released a pent-up demand that has built up since the credit crunch. People have sat tight during the recession not wanting to take on a mortgage and have rented instead. But people now have confidence in the future and want to get onto the housing ladder.”
Other factors driving demand include lenders making mortgages more available than they have done in recent years and growing support for first time buyers, such as the government’s Help to Buy scheme, according to Mr Williams.
He said one reason for a lack of houses for sale at present is that over the past five years a lot of people have bought properties to let out. With these properties providing a steady revenue for owners, there is little incentive to sell.
“However, with prices rising, some owners might just be tempted to sell so they can take some profit out,” added Mr Williams.
David Boyden, managing partner at Boydens, said 2013 had seen a “new level of activity” and viewings, offers and sales were at a six-year high.
“Our stock of properties is lower than it has been for a long time so we are keen to hear from people wanting to market their property.
“There seems to be more of a feel-good factor about the whole economy at the moment and the local property scene is certainly reflecting that feeling. Offers are now being made very close to asking price and, in many cases, asking prices are now being achieved.”
David Knights of David Brown estate agents said the increased demand had seen price rises but only on properties valued under £250,000.
“It’s not across the board,” he said. “There is an acute shortage of property across the board and certainly an increase in demand but we have really only noticed an increase up to £250,000.
“We are not sure why, with the increasing confidence in the economy, more people aren’t choosing to sell; what they’re waiting for I don’t know. I don’t know whether it’s for prices to increase or the weather. This shortage has been around for a few months now and I think we’d all be guessing if we said whether it would continue.”
He added: “Lots of vendors think they’re property looks best in the Spring so there may be a pent up supply to come forward.”
The RICS report said: “The strength of demand relative to supply is reflected in the headline price net balance which for the fifth month in succession exceeded 50; the last occasion this was the case was the middle of 2002.
“Meanwhile, the latest results show that the inventory on the books of survey respondents dropped to, on average, 59 properties per branch in January. This compares with an average of 60.4 properties in December but, more significantly, it is the lowest reading in around four and a half years.
“Buyer enquiries are continuing to be supported by the more favourable credit conditions which are resulting in a much improved environment for the supply of mortgage finance.”