House price growth starts to slow as depleted supply builds toward recovery
4th March 2022
Choice of homes for sale starts to rise as new supply picks up - with new listings of homes for sale running at 5% above the five-year average
House price growth eases slightly to 7.8% in January, down from 8% in December, but pricing still underpinned by near record-high demand
However the market is highly localised, with rises of 16.6% in Powys in Wales to declines of -2.2% in the City of London
New listings have risen for every property type in the first two months of the year compared to 2021 - but particularly for three and four bed detached family homes compared to the same period last year
In January, half of all homes where sales were agreed were snapped up* within three weeks of coming to market, compared to a third of properties during the same period last year
The average house price across the UK is now £244,100, a rise of around £80,000 over the last decade
Friday 4th March, 2022, London: A 5% rise in new listings of homes for sale is signalling the green shoots of recovery in market supply, while the rate of house price growth is starting to slow, according to Zoopla, the UK’s leading property destination, in its monthly House Price Index.
Supply of homes for sale finally beginning to turn a corner
With demand for houses near record highs, there are long-awaited signs that supply is starting to return to the market, with new listings of homes for sale at 5% above the five-year average. Despite total stock levels remaining down on the medium term average, this rise in new supply indicates green shoots of recovery for stock levels, signalling a possible return to pre-pandemic stability for the rest of 2022.
This means that new listings have risen for every property type in the first two months of the year compared to 2021. But the latest data for January and February now also shows a rise in the supply of larger three and four-bed detached family homes coming on to the market, compared to the same period last year. This is finally answering the ongoing demand for three-bed homes, which continue to be the most sought-after property in the country.
While lockdown-led demand eroded stock levels throughout 2021, new supply is up on pre-pandemic levels for this time of year in four regions - Scotland, East Midlands, North East and Yorkshire - and is matching pre-pandemic levels in the North West and West Midlands.
But, as demand continues to outpace supply, the average house price now stands at £244,100 - a rise of 7.8% in the year to the end of January.
2022 sees busiest January and February housing market since 2016
This continued near-record demand for housing has seen the busiest start to the year since 2016, with sales agreed in 2022 to date matching levels seen at the start of 2021. In practice, this means that in January, half of all homes that sold were snapped up* within three weeks of coming to market. In the same period in 2021, a third of all properties that sold progressed from listing to sale agreed within 3 weeks.
But it’s larger family homes specifically that are driving the market, with three-bed houses outside of London taking just over three weeks (23 days) to sell, making them one of the fastest selling property types in the UK. This is in contrast to two-bed flats in London which are taking twice the time to sell, despite the demand for flats and city centre living being reignited by workers’ continued return to offices.
House price growth begins to ease
As supply finally motions toward recovery, there are also early signs that the rate of average house price growth is beginning to ease, with the quarterly rise in the three months to January at its lowest level since August 2020. However, the average value of flats across the UK is up 2.6% on the year - the highest level since August 2017.
But specific regions may tell a different story as Wales in particular continues to see a steep upward price growth trajectory. Here, average values are up 11.7% on the year, with price growth ranging from 16.6% in Powys to 8.7% in Flintshire. In addition, houses in the South West of England continue to creep up with an average rise of 9.7%.
Conversely, London tells a different story with average prices up at a more modest 3.1% - rising most prominently in the borough of Bromley at 6.9% where there is greater headroom for growth, while house prices in the City of London have fallen by 2.2%.
Grainne Gilmore, Head of Research, Zoopla, comments: “The sheer level of activity in the market in recent years eroded the stock of homes for sale. But the data indicates that more homes are now coming to the market, as movers and other owners list their properties for sale - and this will create more choice for the many buyers active in the market. However the imbalance between high demand and supply will take much longer to unwind, and this imbalance will continue to underpin pricing in the coming year.
Even so, we expect the rate of annual house price growth to ease over the course of 2022, as economic headwinds, including mortgage rate rises and the rising cost of living, put the brakes on price rises.”
*time between listing and sale agreed
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