The housing market enjoys its biggest New Year bounce in five years, with demand soaring for all types of property.
- A typical home in the UK costs £242,000
- Average house prices are up 7.4% compared to December 2020
- The current time to agree a sale is faster than average for the UK
Demand for property soared by 49% in January, in the biggest New Year bounce for five years.
Record demand was recorded for all property types, as buyers searched for both houses and flats, according to our latest House Price Index.
The increase in buyers was on a par with the record levels of interest seen during the stamp duty holiday, and suggests the search for space still has further to run.
The spike in activity helped push up the average cost of a UK home to £242,000, compared with £216,500 this time last year.
What’s happening to house prices?
Property prices rose by 7.4% in the year to the end of December, with gains for houses continuing to significantly outstrip those of flats.
While the cost of terraced, semi-detached and detached homes soared by 8.8% during the year to stand at £289,500, the price of flats edged ahead by just 2.2% to £175,700.
Across the regions, Wales led the way for the 11th consecutive month with property values rising by 11.3%, followed by the North West at 9.2% and the South West at 9.1%.
London continued to lag, posting increases of just 2.6%, although a third of the capital’s boroughs saw price growth of more than 4%.
How busy is the market?
Demand soared across the board at the start of the New Year, with buyers up 49% compared with the average for the past three years.
Three bedroom homes outside of London were the most sought-after property, with demand for these homes four times higher than the five-year average.
Meanwhile, as hybrid working continues to be the norm and city workers start to return to offices, demand for flats was on a sharp upward trajectory, reaching its highest level for five years.
The supply of homes listed for sale also appears to have turned a corner.
Although the number of homes on the market is still 44% below the five-year average, the situation is an improvement from when it was 47% down at the end of 2021, and reverses the trend seen during the past 11 months.
While demand continues to outstrip supply, there is now a growing correlation between the types of home buyers most want and those that are available.
Three-bedroom houses top the list for both supply and demand, although two-bedroom flats are the second most available property, while two-bedroom houses are the second most in demand home.
The increase in supply could be because buyers, keen to make a move before interest rates increase again, are starting to list their current homes for sale now.
Even so, further rate increases are not expected to have a big impact on the property market, as mortgage rates remain low by historical standards and, with three-quarters of homeowners on fixed rate deals, the majority of people will be protected from further base rate rises.