Home buyer demand is as high now as it was during the peak of the stamp duty holiday but at last we’re seeing the green shoots of a recovery in the number of homes being listed for sale.
Gradual though it may be, this improvement in the flow of supply indicates that in 2022 we could return to the stable housing market conditions last seen before the pandemic.
It’s good news for buyers and home movers who will start to see greater choice. But there’s still a long way to go before we see equilibrium between demand and supply.
Spring brings new listings
Our analysis of residential property data found that in January and February there was a 5% rise in new listings compared to the five-year average. What’s even more reassuring is that this incremental increase of homes for sale is evident in every region across the UK compared to the same period last year.
Our House Price Index (HPI) recorded five regions that outperformed January and February 2021 by between 10% and 14%; East of England, Scotland, South East, South West and East Midlands.
It’s a favourable comparison, however, given the country was in a period of lockdown in the early months of 2021. But it is worth noting that four regions in the UK have a higher number of new listings in the first two months of this year compared to the long run average.
Regions where volumes of new listings is higher than the national average
The volume of new homes listed in Scotland is 7% up on the five-year average. Meanwhile Yorkshire & Humber is 5% higher and the East Midlands and the North East are both 4% up on the long run total. The West Midlands and North West regions are broadly in line with the five-year average.
Listings for all property types are higher than 2021. Family homes are the most popular style of property returning to the estate agent’s window.
Our HPI shows an annual rise of more than 10% in three and four-bedroom detached homes being put up for sale. Compared to the five-year average, however, listings for this property type are down around 17%.
Buyers of flats are also enjoying more choice. The flow of new apartments onto agents’ books is up 9% on last year and when compared to the long run average.
It’s important to frame this welcome recovery in the context of severely low existing stock levels. The total stock of homes available for sale is 43% lower than the five-year average while demand runs at 70% above this marker.
Wide swings in price growth
It’s the busiest start to the year since January 2016. Our property data shows a 7.8% annual rise in house prices, a slight easing from December’s peak of 8%. Our HPI marks the average house price at £244,100 a rise of around £80,000 over the last decade.
But the UK-wide average rate of price growth doesn’t tell the full story. The fortunes of some regions, and towns within those regions, have fared better than others while different property types have increased in value faster than others.
Looking at the countries and regions of the UK, Wales leads the way with 11.7% price growth. Unsurprisingly its also the part of the UK which has seen the fewest new homes being listed for sale illustrating clearly the impact of short supply on the pace of price rises.
At the other end of scale is Greater London with 3.1% growth. The rest of the regions, Scotland and Northern Ireland sit between 5 and 10%. But within the regions and countries there are much wider swings.
Within Wales, for example, homes in the central county of Powys have increased by 16.6% in a year whereas in Flintshire, North Wales, prices rose at the relatively slower pace of 8.7%. Homes in Bromley, Greater London rose 6.9% while City of London prices fell 2.2%.
Price growth by property type
The same swings can be seen between property types. Buyers searching for a flat not only have more choice following the 9% rise in listings we’ve already seen this year, but they are also subjected to the lowest prices rises – just 2.6% in the year to the end of January.
Semi-detached homes, on the other hand, have jumped in price by more than 9% over the same period. New listings remain low, down 14% compared to the five-year average and just 3% on a subdued 2021 market.
Outlook
It’s encouraging to see new homes flow on to the market but it will take time to rebuild pipelines of properties. Around half of all properties put up for sale in January moved to sale agreed within three weeks compared to a third of properties last year.
Economic headwinds threaten to stunt the flow of new listings as households, facing the pressures of rising inflation and mortgage interest rates, hold back from moving house.
We expect house price growth to be curtailed by the same headwinds while global uncertainty and volatility arising from the invasion in Ukraine will be felt globally, including our own shores. Our view is that house price growth to reach 3.5% at the end of 2022 with 1.2 million home sales.