The supply of houses on sale in the UK increased in January but still has some way to go to catch up to demand, according to data released today.
House listings were up 5% in January compared to the five-year average, according to Zoopla's house price index report, which it said signalled the start of a potential recovery in activity after many in the industry said there had been a lack of supply in recent months.
The increase in new properties going on sale was seen across all types, including highly in demand three and four-bedroom detached houses.
Supply in some areas, such as Scotland and the East Midlands, is above pre-pandemic levels, although these areas also saw the highest property value increases over the last 12 months.
London lagged behind in that respect, with the value of properties only rising 3.1%.
Cost of houses, which have risen by 7.8% in the year-end to January also showed signs of slowing, with values creeping up by 0.9% in the past three months, the slowest rate of growth since August 2020.
All this is “great news for buyers” according to Myron Jobson, a personal finance analyst at Interactive Investor.
However, with demand continuing to outpace supply and the number of buyers on the market 70% higher than the five-year average, compared to the number of sellers 43% below for the same period, that will continue to apply upward pressure on house prices.
The average house value was £244,000, according to Zoopla, having increased by £80,000 over the course of the last decade.
Demand could climb even higher, said Jobson, if “proposals to unwind the tough mortgage affordability tests, implemented in 2014 to prevent a repeat of the financial crisis, see the light of day.”
“If green-lighted, the proposals could do wonders to buyers’ affordability position, allowing them to secure a home loan at a higher multiple of their salary. But it could also add to the demand supply imbalance for property – thus driving prices higher.”