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According to UK Land registry data, May house sale transactions fell by 15% compared to the same period in 2014, while sales of homes worth more than £1000,000 came down 21%. While some saw this as welcome evidence the housing market is finally cooling off (mainly estate agents, of course, desperate to bring both sales volumes and the record low number of homes actually on the market back up), the reality of the situation is that the supply/demand seesaw is now heavily weighted to one side – demand. It’s a sellers’ market right now, not a buyers’ one. House prices are still rising, some by up to 13% a year. The market may be cooling off but it’s still white hot!
As home owners realise that prices are set to rise, they’ll hold onto their assets, bringing the number of homes for sale down even further, sending prices yet higher. But could UK house builders step in to meet the demand through new housing? It’s a possibility, and with UK 100 stalwarts Taylor Wimpey (TW.) and Barratt Developments (BDEV) all but shrugging off Monday’s flash crash to trade back in the blue on Friday, it looks like market sentiment has it that way too. So have a think about house builders over the weekend – they’re trading at highs, unlike many UK Index stocks this week, but could they go even higher?
Let’s see how they fare next week, when the numbers sink in.
Augustin Eden, Analyst
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