The most recent house price index by Zoopla gives buyers hope that the housing market is becoming more balanced, with the housing stock levels improving.
Buyers will be pleased to hear, that the supply of houses coming on the sales market is increasing, with new listings being 5% higher in January than the past five-year average. This means more houses are coming on the market, providing more choice for stressed house hunters.
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 – and this will create more choice for the many buyers active in the market.Grainne Gilmore, Head of Research at Zoopla
Furthermore, the housing stock levels are improving for all property types. This is especially good news for those buyers, who are after three and four-bedroom detached family homes. Because these were lately in short supply. Now there are 13% more 3-bedroom detached homes on the market compared to the previous year. For 4-bedroom detached houses it’s an increase of 11%.
Do Improved Housing Stock Levels Mean Lower Prices?
However, prices are still rising. Albeit, at a much slower rate than we have seen in the past year. The average UK house price is £244,100 at the moment, which is about £80,000 more than a decade ago. This is a rise of 7.8% in the year to the end of January.
The reason for the continuing rise in house prices lies in the still unbalanced housing market. Because despite the fact that more houses are coming on the market, demand is still outstripping supply.
However, there are signs that the rate at which house prices are rising is slowing down. In the past three months, house prices have only risen by 0.9% overall, which is the slowest they have risen since August 2020.
There are regional differences when it comes to house price rises. Property prices in Wales have risen by 11.7% in the last year, which is the region with the highest price rise. The South West of England has seen a price growth of 9.7% and house prices in the North West and the East Midlands have grown by 9.2%.
The region with the lowest price growth is London, where property prices have only risen by 3.1% in the past year. The likely reason for this is that the London property market has a bigger proportion of flats than other regions. The price for flats has risen at a much slower rate, only 2.6% in the year to the end of January. In comparison, the average price for a semi-detached house has risen by 9.1% in the same period.
What Does This Mean For Buyers And Sellers?
For the time being, we are still in a very fast-moving market, where the housing stock levels are 43% below the five-year average, while the number of buyers is 70% higher.
This means, it is still a seller’s market, who can expect to have sold their home subject to contract within 3 weeks. In the past year, half of all homes were sold within this time frame. In comparison, the year before, it was only a third of homes.
The types of homes that sell the quickest are 3-bedroom houses, which on average sell in 23 days, outside of London. A 2-bedroom flat in London, will take 53 days to sell.
So, low housing stock levels are good news for sellers, as it means they can sell their houses quicker and for a higher price. But at the same time, it’s bad news for buyers.
Buyers find themselves in a fast-moving market, where the choice is limited, and the house prices are high. Zoopla recommends that first-time buyers look at flats rather than houses. Because they will get better value for money, and they will have more choice. And buyers have more time when buying a flat too.
People who want to move to a bigger home, are still faced with a challenging market. Although, they will find it easy and quick to sell their home. But they will have to be prepared to act fast so as not to miss out on their dream home.
What Will The Rest Of 2022 Look Like?
While it is always difficult to predict what will happen, especially at a time like this, with the Ukraine conflict impacting the housing market. But as rising inflation and interest rate, rising energy costs, and increasing costs of living put pressure on household budgets, demand will slow down. This will allow housing stock levels to get back to pre-pandemic levels. With this, the housing market will become more balanced again.
In terms of house prices, Zoopla expects that property values will be 3.5% higher at the end of the year than they were at the start of the year.