20 Aug 2020
The UK’s housing supply could be struggling to match the unprecedented post-lockdown demand from home buyers, new figures from Legal & General Mortgage Club show. Its latest research has found that one in four people (25%) say they are definitely planning to buy a home in 2020, with a further 28% saying they are considering a property purchase this year. However, just 4% of homeowners are definitely looking to sell this year with a further 12% who were just considering moving, according to the research. Nearly two-thirds (61%) of owner-occupiers even say they have absolutely no plans to sell their home in 2020.
The figures highlight a potential worsening of the gap between housing supply and buyer demand. This could leave buyers bidding over fewer properties and leaving some struggling to step onto or up the housing ladder. Recent research from Rightmove has already shown that the extraordinary levels of demand seen in the housing market after the easing of the lockdown have pushing asking prices to a new record high1.
Some of the biggest mismatches in supply and demand were seen in London and the South East. In the capital, 69% respondents planned to buy property in 2020, but just 12% of current homeowners said they would consider selling and 4% definitely planned to sell this year doing so. This compared to 57% of respondents in the South East who still plan to buy in 2020 and just 12% of homeowners who are willing to sell this year.
Elsewhere in the UK, the potential for a mismatch between supply and demand continued. In Wales 50% of respondents were planning to buy in 2020, but just 11% of homeowners said they were planning to sell. In Scotland 49% of respondents were planning to buy property and 17% looking to sell.
The smallest gap between buyers and sellers was found in the South West, where 52% of people planned to buy and 23% planned to sell.
The potential for a mismatch in supply and demand highlights the need for the Government to focus on housebuilding and to work towards its target of delivering deliver 300,000 new homes a year by the mid-2020s.
Recent research from Legal & General Mortgage Club has even found that more buyers could be looking to purchase new-build homes, with a growing number of first-time buyers planning to use the Help to Buy scheme to step onto the housing ladder. The research showed that 13% of these buyers now intend to use Help to Buy who didn’t plan to use the scheme before the crisis. In total, 54% of first-time buyers now want to use Help to Buy scheme, according to the study.
Kevin Roberts, Director, Legal & General Mortgage Club, comments: "From first-time buyers to landlords, we are seeing unprecedented demand from consumers post-lockdown eager to move ahead with home moves and buy-to-let purchases. Many are turning to independent mortgage advisers to find routes onto the ladder and get their housing plans on the move.
Given the wide-ranging impact of the COVID-19 pandemic on the economy, the high levels of activity we are seeing in the mortgage market are a sign that the sector remains resilient and has the potential to keep the market buoyant into 2021. Yet, despite the numbers of consumers ready to buy, our research shows that thousands of homeowners are still reluctant to sell in 2020. This mismatch between buyers and sellers has the potential to dry up UK housing stock, making it harder for homebuyers to find a new place to call home.
Supply and demand continues to be a challenge facing the housing market and while the Government has already announced its plans to ‘build, build, build’, delivering on its commitments to build thousands more new homes will clearly need to be a priority to meet the demand from hopeful homeowners and landlords."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Mortgage Club is one of the UK’s largest and longest-running mortgage clubs, completing £667bn of mortgages since 1995. We are involved in nearly one in five of all mortgages in the UK, in addition to nearly one in three of all intermediated mortgages. The Mortgage Club prides itself on adding value to the adviser community by working closely with new and existing lenders to deliver great products, pricing and criteria. Our popular SmartrFit tool, which is free to advisers, combines an affordability calculator with lender criteria to provide accurate, quick results, to help make advisers jobs easier so they can spend time where it matters.