House price rises are finally slowing, say property experts

The record-breaking surge in house prices is starting to ease thanks to a flood of properties on to the market, according to Zoopla’s House Price Index.

House prices grew by 7.8 per cent in January, representing a slight fall from the eight per cent rise in December, after there was a sharp increase in the number of homes for sale.

New listings were up five per cent on the five-year average which helped lead to house price rises in the three months leading up to January increase at the slowest rate since August 2020.

House prices have been rising sharply following the disruption of the pandemic with chancellor Rishi Sunak introducing stamp duty holidays to boost the market. That has seen the average house price in the UK rise to £244,100 – around £80,000 higher than a decade ago and around eight times the average salary in the UK.

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. 

“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.”

While house prices rises are slowing slightly overall there are stark differences across the country.

The supply of new homes into the market is now up on pre-pandemic levels in Scotland, East Midlands, North East and Yorkshire and matching the levels seen before Covid in the north-west and West Midlands.

Powys in Wales saw prices rise 16.6 per cent with demand still outrstripping supply but in the City of London prices declined 2.2 per cent as the fallout of remote working and lockdown moves continued to affect the area. Across wider London prices were up 3.1 per cent.

New listings have risen across all property types with a particular increase of three and four-bed detached properties during the same period last year. Half of all homes where sales were agreed were snapped up within three weeks of coming to the market, compared to a third in early 2021.

Guy Gittins, chief executive of estate agents Chestertons said: “Whilst larger properties or homes with outside space remain sought-after, apartments in some of London’s more central boroughs are experiencing a steady comeback. This is particularly driven by professionals who are returning to the office and are seeking a home nearby.”