The rate of annual house price growth slowed to 1.8% in the 12 months to February, down from 1.9% the month before.
According to the Zoopla house price index, house prices are still rising faster than a year ago, when the annual rate was 0.2%, but the firm said it expected this to settle in the coming months.
Zoopla said the number of homes for sale rising faster than agreed sales had improved choice for buyers and created a buyer’s market.
While house price inflation is slowing, the number of sales agreed continues to increase, up 5% on a year ago, with demand 10% higher.
The number of sales agreed was 5% higher than a year ago, while demand was up 10%.
There were 11% more homes for sale than last year and Zoopla said this was expected to keep rising as the property market entered its usual spring selling period.
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The firm said around 30% of homes available on its site were typically listed between March and May each year.
Uncertainty about the direction of inflation could lead to fewer base rate cuts this year, and subsequently less of a chance that mortgage rates will drop further. However, average mortgage rates have stabilised and are now around 4.4%, Zoopla said.
A 6% rise in average earnings is expected to support household buying power, but the stamp duty tax threshold rising on 1 April could impact future house prices.
Lower house price rises in Southern regions
Zoopla said the number of homes for sale across all areas was up on last year, with this rising the most in Southern England due to increases in prices and sales activity.
Buyer demand in these regions is also up, but has not kept pace with the growth in supply.
Zoopla said this was why house price inflation was running at 1% or lower in London, the South East, South West and Eastern regions.
The supply of homes in Northern England, the Midlands and Scotland has risen more slowly, compared to a 10% rise in buyer demand. This was creating higher-than-average house price inflation, which was running 3% higher in the North West and 2.5% higher in Scotland when compared to last year.
Zoopla said this resulted in better affordability outside of Southern regions and opened up the potential for house prices to rise at a faster rate.
The level of agreed sales would continue to rise steadily this year as more sellers come to market, the firm said. This will cause house price growth to stabilise further, but Zoopla said this would not be a problem, as the market needed some price growth to encourage sellers to come to market and for buyers to make realistic offers.
Richard Donnell, executive director for research at Zoopla, said: “Buyers have a wide choice of homes for sale, which will keep price inflation in check. Sellers need to be very careful in how they price their homes if they are serious about moving in 2025.”
