Zoopla: ‘Shortage of homes for sale will prevent prices from falling’
House prices rose 8.1% in the year to the end of February which is nearly double last year’s annual rate of 4.2%. This takes the average price of a home to £245,200, according to Zoopla’s House Price Index.
While estate agents reported a 3.5% rise in housing stock on their books, there continues to be a mismatch between supply and demand, putting further upward pressure on prices.
Zoopla said buyer demand remains unseasonably high across the UK at 65% above the five-year average, with demand for family homes currently twice the seasonal norm.
As such, the slight uptick in supply is being driven by existing homeowners looking to make their next move and cash in on the recent house price surge.
Given the fast pace of the housing market, it takes an average 29 days to sell a property.
But in its outlook, Zoopla said the housing market is expected to slow in the coming months as higher mortgage rates and the rising cost of living, as well as the uncertainty caused by the situation in Ukraine, acts as a brake on activity.
However it added that “the shortage of homes for sale will prevent prices from falling”.
Gráinne Gilmore, head of research at Zoopla, said: “Buyer demand remains elevated as the trends that emerged during the pandemic – a reassessment among households about where and how they are living – continue to drive the market.
“High buyer demand and rising supply signal activity levels will remain elevated in the short-term.
“As we move into the second half of the year, economic headwinds, including the rising cost of living and rising mortgage rates will act as a brake on price growth, with annual value rises returning to more sustainable levels.”
Wales continued to see the highest growth for the 12th consecutive month, with values rising by 11.8%, followed by the South West at 10.1% and the East Midlands at 9.6%.
London still showed the slowest growth, with prices rising by 3.2% over the past year, although this varied across boroughs from 6.8% in Bromley to zero in the City of London.
Over the past five years, Welsh house prices have gone up by 35%, the strongest growth in the UK, compared with gains of just 6.5% in London.
Affordability has played a major role in house price increases as growth is strongest in areas with more affordable housing.
The number of sales agreed since the new year was 38% higher than in the same period of 2020.
In London, more sales were agreed in the first part of 2022 than in the same three months of 2021, despite the elevated levels of activity last year due to the stamp duty holiday.
There has also been a rise in buyer interest in other city centres, with demand up 7% in Newcastle in recent weeks, and up 5% in Birmingham.
Activity has shot up in smaller urban areas too, as the number of buyers soared by 20% in Blackpool, and 19% in Swindon.
While the number of properties coming to market sits at 5% higher than the five-year average, the number of homes listed for sale is still 42% below the five-year average.