The pace of property price growth across the UK has started to slow, fresh figures from Zoopla have revealed.
Average prices increased by just 1 per cent in the three months to December 2021, the property portal said.
This took the rate of price growth in 2021 as a whole down slightly from 7.7 per cent to 7.4 per cent.
The average price tag of a home coming up for sale is now £242,000, which is still £25,500 more than at the start of 2020 when the average price was £216,500, according to the data.
As ‘economic headwinds’ such as the growing cost of living crisis bite, Zoopla thinks the pace of property price growth will continue to ease as the months roll on.
Easing slightly: The pace of property price growth across the country has started to slow
Zoopla said new listings remained low, but have improved, and added that demand from buyers was rising.
It said demand for family homes was particularly strong, and claimed international buyers and workers ordered back to the office were helping drive a resurgence in demand for city centre flats and areas outside London.
Demand for flats outside London is reported to have reached the highest level for five years, and demand for family houses outside London is four times higher than the five year average, according to the findings.
In total, demand from buyers was around 49 per cent higher in the month to 16 January than it was over the same period from 2018 through to 2021.
Terraced, semi-detached and detached homes now average £289,500, while flats average £175,700, up 8.8 per cent and 2.2 per cent respectively, Zoopla said.
Grainne Gilmore, head of research at Zoopla, said: ‘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 flats in the capital than at any time since the end of the first lockdown.’
In demand: Demand from prospective buyers remains high, Zoopla said today
Zoopla said that while low listing levels remain a problem, rates have improved slightly in the last few weeks.
A growing number of experts now think supply levels will continue to improve amid the axing of all lockdown restrictions. This in turn could help put the brakes on runaway property price growth.
Wales saw the strongest property price growth for the tenth consecutive month in December, with prices up 11 per cent.
Price tags in Powys, Carmarthenshire and Neath Port Talbot have risen by 14.4 per cent, 13.7 per cent and 13.4 per cent respectively in the past year as the desire for more space and the relative affordability of these markets has pushed up demand.
Liverpool and Manchester have led the way in terms of price growth in the UK’s biggest cities, at 10.7 per cent and 8.7 per cent, contributing to average growth of 9.2 per cent in the North West. Oldham and Rochdale have also registered price growth of more than 11 per cent.
Variations: Property prices in Wales and the North West of England grew most in 2021
At the other end of the scale, London’s home values are up by an average of 2.6 per cent, although in a third of the city’s boroughs including Bromley, Bexley and Havering, price growth is over 4 per cent.
Tom Bill, head of UK residential research at Knight Frank, said: ‘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.’
Hotly pursued: Family homes are in high demand, as are flats, according to Zoopla