House price inflation hit a near four-year high in December and could keep rising in the coming months as the third lockdown is exacerbating the property demand and supply imbalance, a new report has found.
Demand for homes is rebounding fast but supply is falling as sellers seem reluctant to list their homes while Covid restrictions remain in place – with all regions except London seeing a drop in new listings.
The average price for a UK home rose 4.3 per cent to £223,700 in the year to December, the highest since April 2017, according to property portal Zoopla.
On the rise: House prices hit a near-four year high in December
‘Rising demand and a lack of new homes coming to the market for sale will keep an upward pressure on house prices in the near term, especially in the more affordable parts of the UK,’ said Richard Donnell at Zoopla.
Despite the new lockdown, demand for homes in the first two weeks of the year was 13 per cent higher than at the start of 2020, partly thanks to buyers still hoping to beat the stamp duty holiday deadline at the end of March.
However, fresh supply of homes tumbled 12 per cent over the same period across the country, resulting in an uptick in prices.
The only exception was London, where new homes put on the market for sale actually increased by 12 per cent.
Zoopla said this was partly down to home owners looking to move to larger houses in the wake of the pandemic as well as investors trying to get rid of properties as rents fall in the capital.
The new stock in London is mainly made up of flats, the research suggests.
Scotland, on the other hand, saw the biggest fall in new housing stock coming onto the market, recording a 19 per cent decrease, followed by the North East and South West, where new listings both dropped 14 per cent.
Zoopla expects sellers to list homes again once Covid cases start to fall sharply and the country moves back to regional tier based restrictions.
London was the only region to see an increase in new listings at the start of the year
Demand outstripped supply in Janaury, as new listings tumbled 12%
Which region saw the biggest growth in 2020?
Looking at prices across the country, Wales and the North West was the fastest growing region, with prices rising 5.4 per cent in December compared to the same month in 2019.
Yorkshire and Humber followed with price inflation at 5.3 per cent, while in the East Midlands prices soared 4.6 per cent.
Liverpool recorded the fastest growth among the biggest UK cities, with prices up 6.3 per cent.
Manchester is close behind with prices up 6 per cent, returning to levels of inflation last seen two years ago.
House prices have been rising also in southern regions of England, but affordability pressures have limited gains.
Prices in London soared 3.1 per cent in the year to December, but this is way off the 20 per cent annual growth rate recorded in the summer of 2014.