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Housing demand continues to outweigh supply in February – Zoopla

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  • 29/03/2022
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Housing demand continues to outweigh supply in February – Zoopla
Buyer demand is still unseasonably strong despite a mismatched 3.5 per cent increase in the number of homes available at estate agencies in March.

House prices rose by 8.1 per cent in the year to the end of February, nearly double on last year’s annual rate of 4.2 per cent, making the average price for a home £245,200, according to data from Zoopla.

While higher mortgage rates and the cost of living are expected to slow this trend down over the next few months, overwhelming demand will still see a continued rise in property prices overall, and the shortage of homes for sale will prevent prices from crashing.

Demand for family homes is particularly strong, twice the seasonal norm, with existing home owners looking to cash in on the recent house price surge. Demand for properties in city and town centres has also been growing since the beginning of the year as people return to the office.

The market is shifting rapidly too, with the average property staying on the market for just 29 days.

 

Market growth

Wales continued to see the highest growth for the 12th consecutive month, with values rising by 11.8 per cent, followed by the South West at 10.1 per cent and the East Midlands at 9.6 per cent.

London still showed the slowest growth, with prices rising by 3.2 per cent over the past year, although this varied across boroughs from 6.8 per cent in Bromley to zero in the City of London.

Over the past five years, Welsh house prices have gone up by 35 per cent, the strongest growth in the UK, compared with gains of just 6.5 per cent in London.

Affordability has played a major role in house price increases as growth is strongest in areas with more affordable housing.

 

Buyer behaviour

UK buyer demand remains high at 65 per cent above the five-year average, but it has eased since January.

That said, the number of sales agreed since the new year was 38 per cent 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 seven per cent in Newcastle in recent weeks, and up five per cent in Birmingham.

Activity has shot up in smaller urban areas too, as the number of buyers soared by 20 per cent in Blackpool, and 19 per cent in Swindon.

Meanwhile the number of properties coming to market sits at five per cent higher than the five-year average, a trend that is expected to continue in the coming months as homeowners look to cash in on recent strong price growth and high buyer demand.

However, the number of homes listed for sale is still 42 per cent below the five-year average.

 

The effects on the buyer

First-time buyers are seeing improved choice as home owners move up the ladder and more homes are being built, but they have to move quick, Zoopla said, as the pace of the market is set to increase.

Existing home owners thinking of moving have a window of opportunity to sell with high demand across all property types. Twice as many people are currently looking to buy a three-bedroom home as this time last year, Zoopla’s data showed.

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.”

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