Short supply pushes up UK prices

19 Jan 2022

The average price of a UK property going up for sale has jumped by 0.3% this month, or £852 in monetary terms, according to Rightmove, the property site. The average price of a property coming to market is now £341,019 - 7.6% higher than in January 2021. First time buyer asking prices have also hit a new record high of £214,176 after a monthly jump of 1.4% Why is this happening? Of course, it comes down to supply and demand, with demand continuing to outpace supply. The number of buyers seeking homes is 15% up over this time last year. Tim Bannister, Rightmove’s Director of Property Data said there are three regions that are in “most urgent need” of new supply. He noted: “New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market. These early-bird sellers who got themselves ready to come to market are now benefitting from the busiest start to the year that we’ve ever recorded, with the number of prospective buyers enquiring about homes up 15% on this time last year.” He added: “People who have made it their New Year’s resolution to move are finding asking prices are within just 1% of the record from October last year, and are at the highest level ever recorded for first-time-buyer type homes. All of the signs suggest that prices are likely to continue to rise until more choice is available. Three regions are in most urgent need of new supply, the East Midlands, South West and South East of England, as they are now at unsustainable rates of annual price growth above 10%.”
2022 predictions
The Royal Institution of Chartered Surveyors predicts that house prices could end next year 3-5% higher than at the start of the year. Tarrant Parsons, an economist at RICS, said: “2021 has been an exceptionally active year for the housing market, with transactions close to record levels. However, despite more homeowners seeking more space and various incentive programmes … transaction activity for the coming 12 months will inevitably slow. All else being equal, higher borrowing costs will dampen demand across the market to a certain extent. The major challenge will be around the lack of stock on the market with inventory back close to historic lows, and shows little sign of easing.” Halifax, one of the UK’s biggest mortgage lenders, has also previously said that it expected price growth to slow considerably in 2022 as a result of rising living costs.