The number of property sales agreed in January was 10% higher than last year, as homes coming to market rose by 11%, a property listing firm said.
The Zoopla House Price Index showed that despite the busier market, asking prices rose at a slower pace of 1.9% in January, down from 2% in December.
The average asking price came to £267,700 and Zoopla maintained its prediction for values to rise by 2.5% by the end of the year.
While house price inflation slowed across most regions of the UK in January, Zoopla noted a North/South divide in house prices, saying average prices in Northern Ireland were 7.2% up, while in the North West, there was a 3% surge.
Kevin Roberts, managing director at Legal & General Mortgage Services, said: “While house price inflation has slightly slowed year-on-year, it’s encouraging to see a strengthening sales market.”
Zoopla’s data also showed buyer demand was 11% higher than last year.
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Tony Hall, head of business development at Saffron for Intermediaries, said: “First-time buyers are racing to complete purchases before the stamp duty changes in April, and today’s figures really hammer that home. But even with an 11% rise in homes on the market, there remains a strain on supply of new housing.
“The last time the UK built enough homes was in 1979, when social housing was a priority. Since then, we’ve consistently fallen short. Proposed changes to affordability tests, like including rental payments, could help more buyers enter the market but also risk driving up demand without enough homes to meet it.
“It’s clear the government is serious about the supply issue – they set out their stall last summer with the 1.5 million homes target. But it’s not just about building more homes. If we’re going to solve the supply issue, we need to think beyond traditional new builds and explore alternative routes to homeownership as well.
“For instance, there’s huge potential in repurposing underused commercial buildings in urban centres, making better use of spaces that are already there. Meanwhile, our research shows 64% of 18-24-year-olds would or already have considered pursuing a custom- or self-build project. Both present a valuable opportunity for brokers and lenders to expand their business and support borrowers in this specialist corner of the market.”
More flats up for sale
Zoopla said there was a trend in flats being listed for sale, with 14% more on the market compared to the 5% rise in houses for sale.
It put this down to a return in price increases for flats last year, and said a quarter of homes currently up for sale were flats. This has outpaced the level of new sales agreed for flats, which was 4% higher than last year, and the buyer demand for this property type, which was just 1% up.
This is in contrast to the demand for houses, which was 16% higher than last year, despite there being just 5% more houses on the market.
Zoopla said the mismatch in supply and demand was why the average value of a flat had risen by just 0.5% in the last year, compared to houses, which were 2.2% higher.
However, the firm said it did not expect house values to rise faster as there was more choice and extra stamp duty costs.
Zoopla said most flat sellers were expected to make smaller gains than house sellers, with 40% of flats less than £20,000 more than the last purchase price, compared to 6% of houses. The firm said the gains were not guaranteed either, as 15% of flats were priced lower than their purchase value.
In the last five years, the average value of a flat has risen by just 7%, while houses have increased by 24%.
Over a longer period, the gap between the price of a house and flat is at a 30-year high, with a 67% difference between the two property types at £319,500 and £191,300.
Despite mortgage repayments for flats being 43% lower than renting and payments for houses being 22% higher, Zoopla said buyers still had a preference for houses.
