The head of the National Association of Estate Agents is warning there could be a panic reaction by sellers, flooding the market with homes in the fear that mortgage restrictions and interest rate rises may reduce buyer numbers.
NAEA managing director Mark Hayward says the number of house-hunters is substantially higher than the number of properties on sale - at the moment.
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 he warns.
Hayward's concern comes as the latest NAEA figures show a particularly strong market until recently, with 19 per cent of buyers paying more than the asking price in May.
The NAEA data shows that the supply of homes for sale has dropped by 27 per cent since this time last year, to 44 properties available per NAEA-registered branch.
The number selling for more than the asking price in May is nearly three times the seven per cent recorded when NAEA first collected this data in September last year. Some 46 per cent of sellers accepted lower than asking price - the smallest percentage over the same period.
NAEA member agents also reported an increase in the average number of sales agreed per branch, up from nine in April to 10 in May. The average number of house hunters registering with the association's members 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 struggle with high prices. The proportion of first time buyers purchasing a home in May shrank to 25 per cent, down from 28 per cent in April.
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Comments
Often, talk of a panic reaction triggers panic thats not really there. A lot of the talk of interest rate rises and mortgage restrictions is exactly that talk. Speculation and conjecture. Like Sophie Allan says, peoples heads can be turned quite quickly and many will act upon instinct on what they read and hear. Its been a particularly strong period for sellers, that may or may not change. Exercising caution, for now, seems like the most sensible thing until we know more.
The price of property at the moment is ridiculous, particularly in London. I won't even consider developing my portfolio until the prices drop. Bring on the desperate sellers!
I think this is something to be cautious of, the property industry has to hit a peak at some point but I don't think we're there yet. People panicking and acting upon what they read and hear is just going to make us hit the peak sooner than expected.