Leading housing analyst Kate Faulkner says the current low transaction level is “a little scary” because with so few sellers, buyers are put off and so stay put.
She says that with so few sellers and such little spare capacity in the rental sector too, purchasers and tenants are lucky to find the right property to move to.
“But if a buyer or tenant can’t find a property, they tend to stay put, meaning less property turnover – bad news for the industry and economy, but also for the public” warns Faulkner in the latest newsletter from her consultancy Propertychecklist.
“A market where few people move when we are so short of newly built homes is a disaster economically” she warns.
She adds: “For anyone thinking of moving, it’s still well worth giving it a go, even if it means popping notes through doors or pounding on the door of agents to let them know what you want or need.”
Faulkner also warns that the so-called ripple effect, traditionally suggesting that price movements in London and south east England ‘rippled out’ to the rest of the country, does still exist but ”in my view this has become muted.”
She then asks: ”If prices haven’t ‘taken off’ at anything like the rate they have down south, will the current halt to house price rises (and, in some areas, reversal) which we have seen in London be replicated elsewhere? For example, even in areas such as Wales, Scotland, Yorkshire and Humber and the North West/East which have hardly had time to recover from the previous market crash?”
Faulkner‘s concerns come shortly after the latest Land Registry data shows property transactions at 1.06m in 2017 - down from 1.1m in 2016 - although it is possible the figure for last year could rise very slightly as ‘late’ acquisitions are registered.
The Registry’s December transaction figures were down 18.8 per cent annually - a significant drop which has led some analysts to become more pessimistic about the housing market.