Strong demand from buyers, together with lower stock volumes, has seen average house prices in the UK increase by £16,000 over the last year.
This represents a +7.1% increase in average house prices, says the November 2021 UK House Price Index report from Zoopla, published today, December 20th.
Price increases have increased homeowner’s equity, with a total of 15.7 million homes registering an increase in values of £15,000+ in 2021.
Buyer demand is not easing up in line with festive trends, but is predicted to build sharply once more after the Christmas period.
Zoopla says that rising household equity, together with movers searching for more space, will underpin activity and bring new supply and demand into 2022.
Head of Research at Zoopla, Gráinne Gilmore, says: “This year has been a record year for the market, with the stamp duty holiday and the pandemic-led ‘search for space’ among homeowners resulting in the highest number of sales since before the financial crisis, with 1.5 million transactions.
“On average, home values are up £16,000 on the year, but our data shows that millions of homeowners have seen a larger uplift than this during the course of 2021.
”This uplift in equity may act as a spur for more households to consider a move in 2022, further boosting the seasonal post-Christmas bounce in activity that traditionally occurs before the New Year.”
The levels of buyer demand, sales activity and new listings have slowed down over recent weeks, in line with the usual festive trends. The bounce-back from the Christmas period slowdown is equally clear, and this will likely start from next week. Last year, property searches more than doubled following Christmas Day. As well as the usual post-Christmas pick-up in demand, it is anticipated there will be extra demand as a result of a continued ‘reassessment of home’ because of the trends that occurred during the pandemic. These include households looking for more space - an extra bedroom, or a larger garden. Also, confirmation concerning changing working patterns for people in the workforce who are in office-based jobs will also continue to be a spur to searching for a new property.
A recent Zoopla survey indicated that around a fifth of people who said they were keen to move in the coming 18 months said that new working from home arrangements were part of their decision. A wish to lock in property price gains may also cause additional activity.
Zoopla says the speed at which the housing market is moving will begin to normalise next year. The average time from listing a property and agreeing a sale subject to contract was 50 days in the years prior the pandemic. This year however it has been consistently less than 30 days.
Zoopla reports that as the UK housing market starts to move at a more normal pace, it will be a chance for supply pipelines to heal, although total stock volumes are likely to remain lower than the five-year average.
Looking ahead, Zoopla says there are “looming economic headwinds into 2022, not least rising inflation which will translate into higher household costs”.
Last week The Bank of England raised the base rate from 0.1% to 0.25%, the first rate rise in three years.
Zoopla expects market conditions to normalise next year. However, it predicts that the demand/supply imbalance is unlikely to fully alter, and this will be one thing that underpins pricing into next year. It also states that there is more headroom for growth in prices in some of the most affordable areas of the country. And so, its forecasts show price growth of 3% for 2022, with transaction levels at 1.2m, which is down from 1.5m this year but in line with trends during the last five years.
