Graph of UK Property Market Supply and Demand Since 2004: Very Surprising, and Positive

I found a fascinating graph today on Twitter, created and posted by Henry Pryor, one of the UK’s most well-known property market commentators (@HenryPryor). The graph tracks the levels of supply and demand for property since 2004. It basically seems to show that (a) you are just a likely to sell your property now as you were during some of the ‘boom’ times, and (b) levels of buyer interest in buying property are pretty consistent throughout the year, even through the winter months when many sellers are thinking that it’s best to wait till spring to try and sell. First the graph, then the comment…!

Supply and Demand Graph UK Property Market Since 2004

Why was it fascinating? Because it completely surprised me and confounded some of the feelings that I had about the way that the property market had been going in the past few years, particularly since the housing market ‘crash’ that started in 2008. Obviously these are UK figures, but they’re still very informative.

What is fascinating is that it tracks the relationship between the number of properties people put on the market (level of optimism) and the number of properties that are actually selling (reality). In other words, it shows the likelihood of your property actually selling. And you’d think that this would be worse today than it was a few years ago…right? Well, not necessarily by the looks of things. At the moment it appears that more than half of properties listed actually sell. Even at the ‘peak’ of the market, the statistics weren’t much more favourable. So, from a glance at this graph at least, you appear to have just as good a chance of selling your property now as you did when everything all looked rosy.

What is also interesting is that it shows huge peaks and troughs in the number of people putting their properties on the market: the number of properties coming to the market around November/December/January falls markedly. However, sales levels are actually fairly steady through this period. What does this mean? It means that buyer are still buying properties at this time of year but they have less choice of properties to buy from. I’m sure a statistician or economist might correct me on this, but does this not mean that demand during this time of year is therefore proportionately higher? There’s less competition from other properties on the market so you are more likely to sell? Either way, it does indicate that the lack of confidence that sellers have in selling during winter is not matched by any such lack of desire by buyers to buy.

Comments

5 responses to “Graph of UK Property Market Supply and Demand Since 2004: Very Surprising, and Positive”

Herny Pryor

October 28, 2011

Interesting conclusions Robert, I’m pleased to see that the graphs have given cause for thought on what the usual commentators would have you believe.

However, for the sake of balance (and because I have the privilege of the original numbers that the graph is based upon) I believe that the chance of selling has actually fallen this year.

What the graph you have used doesn’t show is the build up of unsold inventory which currently sits at around 820,000. Selling at just 68k a month you may be surprised to learn that most homes in fact do not sell.

Taking the total number of homes on the market across the UK, at the current rate of sales and the present rate of new property coming on then the chances of selling in the first month is currently 7% (typically it would be 9%) and 37% in the next 12 months (usually 43%).

Reply
Herny Pryor

October 28, 2011

Interesting conclusions Robert, I’m pleased to see that the graphs have given cause for thought on what the usual commentators would have you believe.

However, for the sake of balance (and because I have the privilege of the original numbers that the graph is based upon) I believe that the chance of selling has actually fallen this year.

What the graph you have used doesn’t show is the build up of unsold inventory which currently sits at around 820,000. Selling at just 68k a month you may be surprised to learn that most homes in fact do not sell.

Taking the total number of homes on the market across the UK, at the current rate of sales and the present rate of new property coming on then the chances of selling in the first month is currently 7% (typically it would be 9%) and 37% in the next 12 months (usually 43%).

Reply
chris wood

October 28, 2011

Henry does good statistics and yes, I am a bit of an anorak myself on these kind of things.

I agree almost totally with all you have to say and I’m not in the least surprised that the figures show what they do. Through boom and bust there is a core level of transactions that keep going due to socio-economic reasons… some people HAVE to move!

Nice blog. Thanks 🙂

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Robert Carroll

October 28, 2011

Thanks for your comments Henry and Chris.

Your further analysis of the numbers is fascinating Henry and certainly does give food for thought and makes me feel better that our conversion from listing to sale is actually considerably better than the national average (if there’s a silver lining to be had!). Although the numbers are showing a downward trend, it’s still interesting to compare historically and see that the proportion of houses selling a certain points in the past, even in the ‘good times’, wasn’t dozens of percentage points higher. I think that the general feeling is that the chances of selling now are FAR lower than they have been. Whilst that might be true of certain points in the last decade, it looks like there have been points in the last 7 years when the ratio of sales to listings has not been much better, if at all, than now. I suppose that, although I’m recognising that the market is a LOT tougher now than it was a few years ago, it’s not THAT bad. The most interesting thing for me though is the buying patterns, where levels of purchases are far, far more even than levels of new listings to the market, with the latter peaking and dipping dramatically through the year. Either way, very interesting figures and thank you again for letting me use the graph. I agree, Chris, that there is a core of people who will move and who can move regardless of the economic climate. For many people, property isn’t just an investment but is a home too. For those moving, the drop in their own will be reflected generally in the one that they buy. As long as they have enough equity in the property, they’re able to move. It doesn’t address the plight of the hundreds of thousands in negative equity: they primarily are the ones who are stuck where they are for the time being and I really feel for anyone in that position.

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Dan Cookson

November 2, 2011

Robert, Henry
Very interesting analysis/interpretation though the ‘apparent’ higher than expected levels of sales through the winter period really had me scratching my head as it contradicts data from Registers of Scotland which clearly shows the marked seasonality of sales through the year. A quick look at the HMRC data suggests that the smoothness of sales through the year in Henry’s chart
is entirely a function of using the seasonally adjusted UK figures. If you look at the non seasonally adjusted figures you get a true picture of the variations in sales throughout the year.

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