House prices stagnate as landlords selling fuels surging property supply

The UK housing market is experiencing a slowdown in price growth despite a brighter interest rate outlook, as a surge in available properties gives buyers the upper hand.

That’s according to property consultancy Knight Frank, which says part of the supply imbalance is due to landlords selling to avoid the Renters’ Rights Bill.

It has now revised its house price forecast for this year to a modest 3.5% increase, up from 2.5%, reflecting cautious optimism.

Tom Bill, the firm’s head of residential research, said: “There is a growing number of landlords trying to sell due to upcoming legislative changes.

“The result is that new UK sales instructions were about a fifth higher than the five-year average, excluding 2020, in the first four months of the year, and the number of new prospective buyers was a fifth lower.”

‘Guess the tax rise’

He continued: “We think demand could be kept in check by higher inflation or a prolonged bout of ‘guess the tax rise’ before the Budget this autumn.

“But another factor keeping growth in check is the imbalance between supply and demand, a trend we noted earlier this year in prime London markets.”

The figures show that in prime central London, average prices have fallen 19% over the past decade due to tax changes and political uncertainty.

Knight Frank says that in April, the ratio of new prospective buyers to sales instructions dropped to 5.4, the lowest since mid-2018.

This echoes a period of low buyer confidence, driven by Brexit fears and political turmoil – now global trade tensions and domestic economic pressures are weighing on consumer sentiment.

Buyers have too much choice

The supply surge is attributed to the March stamp duty deadline, delayed selling plans from last year’s election and Budget, and financial strain as mortgage rates stabilise.

The data also reveals the stamp duty deadline, offering savings of up to £2,500 for standard buyers and £11,250 for first-time buyers, spurred a 104% year-on-year surge in transactions in March.

Andrew Groocock, the chief operating officer at Knight Frank’s estate agency business, said: “Buyers are able to take their time at the moment because they have so much to choose from.

“That sort of competition means sellers need to get the asking price right when the property is first launched.”

Across the UK’s higher-value urban and rural markets, prices are 8% below their 2022 peak, when low mortgage rates fuelled demand.

The gap between asking and achieved prices has also widened, dropping from 97.1% in April 2022 to 91.7% last month.

If you would like to discuss quickly selling your rental property with experts, contact Landlord Sales Agency: