Britain's property shortage hotspots

The number of properties put up for sale collapsed last month. A study fund that the supply of new properties hitting the market fell 20% across the country in November - and in some places fell 40% or more. We always see a tailing off in supply as we approach Christmas, but this is a bigger collapse than anyone expected.

The study, by HouseSimple.com, identified the towns with the biggest falls in the number of houses being put up for sale as:

Bath, down 43%
Worcester, down 41%
Solihull, down 39%
Sale, Gateshead, Exmouth and Runcorn, down 38%
Woking, down 36%
Bootle, down 35%
Darlington and Carlisle, down 34%
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Supply in London was down 21%, and only two towns saw the number of properties for sale increase (Salford and Chichester). Alex Gosling, CEO of online estate agents HouseSimple.com, said: "Historically, as we get closer to Christmas, the property market does start to slow down, so a fall in property supply levels is not unexpected. However, the drop off is too dramatic to be simply attributed to seasonality factors alone."

This study reflects the findings yesterday from Halifax that the number of properties coming up for sale are at a record low. The imbalance of supply and demand is going to further fuel house price rises - as buyers chase the few properties available. Martin Ellis, housing economist at Halifax warned: "The increasingly acute imbalance between supply and demand is causing prices to rise at a robust pace. A situation that is unlikely to reverse significantly in the short-term."

Why?

One of the reasons so few houses are coming up for sale is that so many are in the hands of investors - who have no intention of selling. Lending to landlords actually rose 10% over the past 12 months, and currently, one in five properties are owned by investors.

They are not going anywhere while they are enjoying the double whammy of rising property prices, and rapidly inflating rents (as conservative mortgage lending has forced Generation Rent to stay in rental property).

The proposed changes to stamp duty and tax relief on mortgage interest will certainly force some to sell up, but not be enough to put the majority of investors off, as the added costs can be passed onto their unfortunate tenants.

Meanwhile, the number of homeowners putting their properties on the market is also falling. As prices rise, people who are already on the housing ladder see the home that represents the next rung of the ladder become unaffordable, so they are less likely to be able to trade up. It means that the only people selling up are those who are trading down, or moving areas, and there aren't enough of them around to keep supply levels high enough.

Gosling added: "The Government has implemented several schemes to help people get onto the property market, the latest of which being the Help to Buy ISA. However, they aren't addressing the supply shortage, and if there are no homes to buy, these schemes are just window dressing."