Affordable homes shortage puts property availability at four-year low

12 November 2015 – A fall in the number of affordable homes being put up for sale has driven overall property availability in the UK to its lowest level since 2011.

A quarter of a million new properties went on sale between July and September this year, three per cent lower than the same period in 2014.

Experian’s Property Index shows the number of homes on sale for £100,000 or less in the UK fell by five per cent in the third quarter of this year compared to 2014’s figures, while property availability in the £100,001 to £250,000 band dropped by 10 per cent.

The number of properties for sale between £100,001 and £250,000 in Central London was down more than half (52 per cent) compared with the same time last year. The Outer Metropolitan region also experienced a significant year-on-year decline (39 per cent) in the number of reasonably-priced homes, with about one thousand fewer properties on the market this year.

Andy Wills, Data Director at Experian Consumer Information Services at Experian, said: “First and second-time buyers, particularly those with growing families, are likely to be most affected by the shortage of affordable homes. With this in mind, it’s vital people get into the best possible financial shape to demonstrate they are eligible for a mortgage, starting with a strong credit rating.

“Lenders can help by supporting people throughout the mortgage application process and getting a fuller understanding of someone’s circumstances, ensuring they are able to manage repayments for the duration of the mortgage. Prospective buyers should take time to build a positive credit history and record of money management, so it’s important to start preparing as soon as you decide to buy.”

Affordability was also a particular issue in the East of England, with a significant decline (18 per cent) in the number of new properties for sale between £100k and £250k. In real terms, this equates to a drop of over two thousand newly-built houses on the market in the last quarter.

In contrast, owners of high-end properties, those valued at more than £500k, have been putting their homes up for sale in growing numbers. Throughout the UK, the number of homes on the market in the £500k-£750k price bracket increased by 10 per cent year-on-year, while houses valued at £750k and over increased by six per cent. In the North West, the difference was even more marked – with an increase of 46 per cent for properties costing more than £750k, and a 25 per cent rise for similar-priced dwellings in Yorkshire and the Humber.

Regionally, the North West saw the largest total number of properties enter the market in Q3 2015, with 33,884 homes for sale, an increase of 12 per cent on Q3 2014. Homes for sale in the Yorkshire and the Humber region increased by four per cent, and those in the North East rose by almost two per cent.

The table below shows the percentage change from Q3 2014 to Q3 2015 in the number of properties that entered the ‘for sale’ market during this period.

As fewer affordable properties come up for sale, navigating the competitive mortgage market can be difficult for prospective buyers. That’s why Experian has launched a useful step-by-step Mortgage Application Guide available at http://www.experian.co.uk/improve to give people the best chance of being approved when they do find a property. Advice includes demonstrating that you can manage your finances by paying off cards and loans, and watching how much credit you apply for six months before approaching lenders for a mortgage.

Here are some simple tips from Experianto help people get into a good financial position so they can get the best property they can afford:  

1. Know what you have to spend: When looking to get on the property ladder in a competitive market it is important to consider what funds you can draw together to form your deposit. As well as determining the mortgage size you’re likely to be approved for, the size of your deposit will often dictate how much you face in terms of interest rates and lender fees.

2. Do your research:Use mortgage calculators and comparison websites or speak to a mortgage adviser to find out where the best deals are. Having an understanding of the market in your chosen area will help you find a home and move quickly once you find it,  working out what you can afford to borrow and repay.

3. Scrutinise your spending: Scrutinising your last few months’ outgoings carefully will help you understand exactly where your money is going, and help you identify areas you can cut back. Since the Government introduced new affordability rules through the Mortgage Market Review, lenders are likely to look back through your accounts and look for those with a solid track record. Prepare now by building good habits like increasing the amount you save, clearing overdrafts and cutting back on discretionary spending to ensure you finish the month with at least a small surplus..
4. Check your credit report: As soon as you make the decision to buy (before you have even found a specific property), check your credit report with all three credit reference agencies. Ensure everything is accurate and up to date and reflects your current circumstances – e.g. that all of your open credit accounts are recorded and that any old accounts have been marked as “settled”. If you spot anything you believe to be inaccurate, contact the relevant credit reference agency and ask them to investigate the entry with the lender as soon as possible, as any inaccuracies can cause delays when you do make an offer.
5. Room for improvement: If your credit report has areas for improvement, make a plan to get it into shape well before making your mortgage application. There are a number of steps you can take, including: ensuring you’re registered on the Electoral Roll; paying down outstanding balances to less than 50% of your limit; paying off more than the minimum repayments on your accounts each month and making sure never to miss a repayment.
6. Don’t fall at the last hurdle: Once you’ve found the property and are ready to apply for a mortgage, take time to do some last-minute checks. Check your credit report again to make sure nothing has changed and everything is accurate right before you apply. Check the exact way your address and other personal details appear on your credit report. Small inaccuracies could see your application turned down, so don’t overlook the details.

Lenders interested in finding out how information about property, such as type, value and ownership, can help them understand and treat their customers more fairly, please visit www.experian.co.uk/property-data

ENDS

Notes to editors

Experian’s Quarterly Property Index sources data from a range of UK sales & letting agents.

Contact:

Tom Pavey-Smith / Eddie Keough

Lansons
020 7490 8828
thomasps@lansons.com / edwardk@lansons.com 

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