19% of buyers are paying more than the asking price to secure their property purchase, according to the National Association of Estate Agents (NAEA).
The organisation’s May Housing Market Report shows that the supply of houses for sale has dropped by 27% since this time last year, to 44 properties available per NAEA registered branch, meaning buyers have been forced to increase their asking price to beat off competition and secure their property.
One in five properties sold for more than the asking price in May, nearly three times the seven percent recorded when NAEA first collected this data in September 2013. 46% of sellers accepted lower than asking price – the smallest percentage ever recorded since the data was collected in September 2013, when 71% of sellers accepted below asking price.
NAEA member agents also reported an increase in the average number of sales agreed per branch, up from nine last month to ten in May. The average number of house hunters registering with NAEA agents dropped slightly in May to 374 down from an average of 392 house hunters in April.
High property prices are also affecting the first time buyer market, as those with limited budgets are struggling with high prices. The proportion of first time buyers purchasing a home in May shrank to 25%, down from 28% in April.
Mark Hayward, managing director of the National Association of Estate Agents, said: “The number of house-hunters is substantially higher than the number of properties on the market, so competition is always going to be rife.
“Unfortunately the lack of housing problem is not going to go away anytime soon. We have seen a shortage in the number of new builds in the last five or so years, and those who are currently in a property and looking to move may be put off by the cost of stamp duty.
“With limited numbers of houses for sale, unfortunately it means that those who simply can’t afford to increase their original offer will often be priced out the market.
“With current speculation of the interest rate rising, we could see more homeowners putting their houses on the market in a panic that house prices may reduce as a result of interest rate and mortgage rate hikes. However the new Mortgage Market Review (MMR) rules may create ‘mortgage prisoners’ who cannot gain new mortgages for house moves, resulting in a slowdown of house sales and this coupled with recent sharp rises in house prices could start to take some of the strongest heat out of the property market.”
The report also found that in May, semi-detached homes remained the most popular choice for buyers with over a third (37%) of house hunters seeking this type of property, more than detached (29%), terraced (10%) and flats (18%). Nearly half of buyers (49%) were looking to up-size (49%) rather than down-size (15%) in May.
