Here’s an interesting graph from Nationwide’s latest house price index (June) showing the decline in the amount of property currently on the market.

It’s using data from the Royal Institution of Chartered Surveyors and it doesn’t need a huge amount of explanation: basically, since the credit crunch, stock levels in the sales market have plummeted.

In RICS’ own words: “New instructions to sell property fell further in May. This series has now dropped in every single month over the last two years and, if anything, the picture appears to be becoming more acute.”

graph

The Nationwide notes that the recent recovery in house prices has occurred despite historically low levels of house purchase and they conclude that low stock levels explain this anomaly.

“Normally, such a low level of house purchases would be associated with falling house prices … however, there continues to be a relentless drop in the stock of property available for sale. As a result, prices have been able to stabilise even in the face of very low demand.”

Fair enough, but will stock levels rise, and what will happen if they do? One possible scenario is that the more stable sales market will encourage people to put their homes on the market. Job losses, alas, will also force more people to sell.

But will demand rise to meet increasing stock levels? Our own figures suggest demand is already strong – in June, visitors to FindaProperty.com were up 12.6 per cent year-on-year and enquiries to agents were up 15.6 per cent.

But as we all know, interest is still not translating into significantly more sales. Unless it starts to, a rise in stock levels could tip the balance again and put the pressure back on prices.

This is why the NAEA today called on the Government to “do more to ensure that money that has been given to banks finds its way through the system and into the housing market.”  We second that … but will the call be heard?

In the meantime, the upside of this situation is that low stock levels mean sellers are in as good a position as they’ve been in months – lots of interest and little competition. So if you’re thinking about selling, this could well be the moment to go for it.

Related Tags: House Prices, graph of the week, General

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