According to Zoopla’s house price index, this resulted in a slight dampening in house price growth in the year to January as it rose 7.8 per cent to £244,100. This was compared to the eight per cent growth recorded in December.
Zoopla said this was “highly localised” as Powys in Wales recorded a 16.6 per cent increase compared to London’s negative 2.2 per cent.
New listings
In the first two months of the year, new listings increased for every property type compared to 2021. The rise in newly listed homes was most evident in the supply of three and four-bed detached homes, with a 13 per cent increase in three-bed detached homes and an 11 per cent uptick in four-bed detached homes.
The listings for one-bed flats rose nine per cent compared to last year, while two-bed flats increased by five per cent.
Homes selling fast
Zoopla said demand for housing resulted in the busiest start to the year since 2016 with sales agreed matching levels seen in 2021.
Almost half of all homes listed in January where sales were agreed were purchased within three weeks of coming to market, up from the third of homes which progressed from listing to sale agreed during the same period last year.
Larger homes drove the market with three-bed houses outside of London proving the most popular and taking just 23 days to sell. Zoopla said this made these properties the fastest selling type in the UK.
In contrast, two-bed flats in London are taking twice as long to sell at an average of 53 days.
Looking ahead, Zoopla still expects 1.2 million homes to be sold this year down from 1.5 million in 2021 and average house price growth will be between two and four per cent by the end of the year.
Grainne Gilmore, head of research at Zoopla, said: “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.”
She added: “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.”
Activity unlikely to last
Guy Gittins, chief executive of Chestertons said: “Last year, we saw house hunters feeling left in limbo as the impact of the pandemic created a strong sense of economic uncertainty. Since then, buyer confidence has returned and there has been a drastic increase in demand for houses and apartments alike.”
Gittins said to see new buyer enquiries at this level at the start of the year was “truly remarkable” and an indication of a buoyant market for the first half of the year at least.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown also said activity was unlikely to last.
She added: “There’s a good chance that some of this was driven by the rate rise in December, and the worry that if they didn’t hurry up and make a move, they’d end up paying much more for a mortgage on their new home a few months down the line. Buyers, meanwhile, have been desperately waiting for new stock, so were poised to snap them up.
“But this is likely to be a short-lived phenomenon, because buyers are coming under increasing pressure. Even if they decide they can take the interest rate rises in December and February on the chin, rising prices may be enough to cool their enthusiasm.”
She said higher energy bills, the soaring cost of living as well as the war between Russia and Ukraine could push prices higher.
Coles added: “It could be the final burden that buyers decide they can’t bear, which calms the January flurry to barely a flutter as we go further into 2022.”
