New Year housing demand surges 50%: Zoopla

The start of the New Year has seen demand for property soar by 49% compared to the new year markets of 2018 - 2021, rivalling record demand seen during the stamp duty holiday, according to the latest Zoopla data.

Related topics:  Finance News
Rozi Jones
27th January 2022
mortgage house first time buyer first-time ftb
"Even after nearly two years, the pandemic-led ‘search for space’ is one of the factors creating record demand for homes this month."

2022 continues to be focused on the pandemic-led search for space, and it’s three-bed houses in particular that are most sought-after.

The demand for three-bed houses outside London is driving this trend, being four times higher than the five year average, becoming the most listed for sale on Zoopla in the month to 16th January.

Geographically, the suburbs remain in the highest demand with Thurrock (Essex), and the suburbs of Birmingham, Glasgow and East London (Barking & Dagenham) all topping the list of most sought-after areas.

As hybrid working continues to become the norm and city workers slowly return to offices, demand for flats is on a sharp upward trajectory, reaching its highest level for five years. Many agents are reporting that relatively modest price increases (2% for flats compared to 9% for houses) have helped reignite their popularity amongst buyers.

Despite unprecedented levels of demand for additional space by families and a sharp rise in demand for flats by office workers, Zoopla says supply constraints may have finally turned a corner. Whilst the total stock of homes for sale is still 44% down on the five year average, this has eased from 47% at the end of 2021, indicating that new supply is coming to the market.

The average price of a house is now running at £242,000, representing 7.4% growth year-on-year. Terraced, semi-detached and detached homes now average £289,500, while flats average £175,700 - up 8.8% and 2.2% respectively year on year, demonstrating the recent divergence in demand.

However, Zoopla still expects price growth to slow as the housing market returns to more normal market conditions in 2022.

Grainne Gilmore, head of research at Zoopla, commented: “The effects of the pandemic on the housing market cannot be underestimated. Even after nearly two years, the pandemic-led ‘search for space’ is one of the factors creating record demand for homes this month. The market is also being boosted by office-based workers re-thinking where and how they are living amid more hybrid working models. But in some cases, as offices re-open, some demand is flowing back into city centres.

"Couple this trend with the return of international demand and the more modest prices rises in flats compared to houses over the last two years, and it’s clear why we are now seeing record-high spike in demand for flats outside London, and the highest rate of demand for flat in the capital than at any time since the end of the first lockdown.

"Just like much of 2021, the number of homes available for sale is lower than typical levels, but there are signs that the imbalance between demand and supply is starting to ease. As more potential sellers are able to find a home to move to, this will spur more supply in the weeks and months to come.”

Tom Bill, head of UK residential research at Knight Frank, added: “Demand has been unrelenting since the UK property market re-opened in May 2020. Cheap finance, high volumes of accumulated savings and a desire for more space and greenery have fuelled activity, none of which will disappear overnight.

"Apartments are also moving back onto the radar of buyers as lockdown restrictions are lifted, which has created a temporary sweet-spot of extremely high demand. As interest rates normalise, demand will calm down without going into reverse. The employment outlook for the UK is positive and while inflationary pressures are lingering longer than most people would like, there is no sense they will be permanent.

"The other factor that will usher in more normal conditions is rising supply. As Covid restrictions begin to feel irreversible, supply will increase and apply the brakes to the gravity-defying price growth seen over the last two years.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.