Supply of homes for sale gathers momentum, despite unseasonably strong buyer demand
29th March 2022
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Buyer demand remains unseasonably strong across the UK, with demand for family houses more than twice as high as usual for this time of the year
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The supply of homes being put up for sale is continuing to build momentum, as sellers look to make their next move, in many cases locking in price gains - the number of listings in the average estate agency branch in the UK has ticked up 3.5% over the last month
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Market activity is also being driven by a notable bounce back in demand in urban areas since the beginning of the year. In London, the level of sales agreed is higher than Q1 last year, despite the higher levels of activity 12 months ago due to the stamp duty holiday
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Average house prices are up 8.1% on the year, up from 4.2% last February, while Wales has registered the highest annual regional price growth for the 12th consecutive month, at 11.8%
Tuesday 29th March, 2022, London: Market activity has been driven by unseasonably strong buyer demand and a bounce back in demand in urban centres, although supply is also building momentum with new supply levels up 5% on the five-year average. These are the latest property market trends according to Zoopla, the UK’s leading property destination, in its monthly House Price Index.
Shift in demand and supply imbalance
Buyer demand has eased since January but remains unseasonably high across the UK, with demand for family houses more than twice as high as usual for this time of the year as the long tail effect of the pandemic continues.
The supply of homes for sale is building momentum as a cohort of sellers look to crystallise gains and make their next move. This rise in supply comes despite high levels of activity in the market, with sales agreed in Q1 more than 38% higher than Q1 2020. This trend is likely to continue in the coming months, as price growth and high demand triggers more homeowners to make a move.
Listings for sale across the average estate agency branch are also up 3.5% in the 28 days to March 20th. The stock of homes available to buy is now 42% below the 5-year average, compared to being 47% down in December last year. However, while new supply levels will build this year, it will not be enough to reverse the overall imbalance between demand and supply over the course of 2022.
Urban centres rebound
Mirroring the trend seen in the rental market, there’s been a bounce-back in demand in urban areas since the start of the year with demand up 7% in Newcastle in recent weeks compared to January, while in Birmingham it’s up 5%, as cities continue to open up after the pandemic.
This trend also extends to smaller urban centres with Blackpool seeing a significant 20% increase in demand, closely followed by Swindon with a 19% increase.
In London, this bounce back is also demonstrated by the level of sales agreed*, which is higher than Q1 last year, despite the fillip in the market instigated by the stamp duty holiday in early 2021.
Strong house price growth across regions
The strength of buyer demand amid constrained stock levels continues to put upward pressure on prices. Average home values are up 8.1% on the year, an increase from 4.2% last February and taking the average home to a market value of £245,200
At a regional level, Wales has registered the highest annual regional price growth for the 12th consecutive month, at 11.8%, while this has also contributed to 35% price growth over the last five years in Wales. Despite this, price growth will slow during the second half of 2022 as the rising cost of living, and rising mortgage rates apply a brake to the market.
London's price growth is the slowest at 3.2% - although this ranges significantly from an increase of 6.8% in the borough of Bromley to 0% in the City of London
Gráinne Gilmore, Head of Research, Zoopla, comments: “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.
“Demand is strongest for family houses, indicating a continued appetite for additional internal and external space. But demand is up across nearly all property types, indicating that those thinking of moving are in pole position to sell. Given the tick up in new listings of homes for sale, there is now a wider choice of homes for movers and all buyers. The increased economic headwinds, including the rising costs of living and increasing mortgage rates, property price growth will start to moderate as we move through the second half of 2022.”
*sold subject to contract
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