Buyer appetite continues to gather pace, while sellers are reluctant to list their homes for sale, driving up house prices, according to our latest House Price Index.

UK house prices have reached an almost four-year high, with the average home now worth £223,700.

The pandemic is stifling the flow of homes coming onto the market, with would-be sellers pressing pause on listing their homes for sale.

But buyer appetite continues to gather pace, according to our latest House Price Index.


What’s happening to house prices?

UK house price growth has hit 4.3%, the highest since April 2017. Momentum is coming from northern regions, where property is more affordable.

At a country level, Wales has the highest growth rate, with house prices rising 5.4% year-on-year.

And at a city level, Liverpool’s house prices are climbing the most, up 6.3% on a year ago. That’s the fastest rate of house price growth in 15 years.

Manchester is hot on its heels, with house prices up 6% year-on-year.

All cities monitored by our House Price Index recorded house price growth apart from Aberdeen, where prices dropped by 2.4%.


Which regions are seeing decade-high house price growth?

House price growth has hit a 10-year high in the north east, north west and Yorkshire & Humber, driven by strong buyer appetite and affordable property.

In fact, growth in these regions is running at the highest rate since before the global financial crisis, with house prices rising between 3.8% and 5.4% a year.

House prices are climbing in southern regions too, but property is less affordable, acting as a drag on growth.

In London, house prices are 2.9% higher over the last year – but this pales in comparison with the 20% annual growth rate recorded in July 2014.


What’s the pool of homes for sale like?

Even though the housing market remains open for business, the third national lockdown appears to be putting off some would-be sellers from listing their properties for sale.

The flow of homes coming onto the market in the first weeks of the year was 12% down on the same time last year.

The one exception to this trend is London, where the supply of homes for sale is growing. Flats account for much of this increase, as owners look to move up the housing ladder in search of more space.

Falling rents and expectations of an increase in capital gains tax in 2021 could also be motivating investors to sell.


What about buyer appetite?

Despite the third national lockdown, demand for homes to buy was 13% higher in the three-odd weeks between Boxing Day and 17 January than the same time a year ago. And the number of new sales agreed was also 8% up on last year.

There’s traditionally a seasonal bounce in activity at this time of year. But the pandemic has added extra impetus this year.

With more time spent at home, many people are carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles.

Some buyers have been motivated by the stamp duty deadline too.

And rising house prices have also meant that people have more equity in their homes, adding further impetus to move.


What does this all mean for home movers?

The combination of a lack of new homes for sale, rising buyer appetite and more new sales being agreed means that the overall number of homes for sale is 6% down on this time last year.

Not only is this reducing the choice of homes on the market, it’s intensifying competition among buyers, and keeping an upward pressure on house price growth.


What’s next for the housing market?

Despite a spike in the pandemic and a third national lockdown, the momentum that built up in the housing market in the second half of 2020 has rolled into the first weeks of this year.

Director of research & insight, explained: “The strength of the market in 2020 has eroded the available number of homes for sale and this will mean continued upward pressure on house prices in the short term.

“The most affordable parts of the UK are recording the highest rate of price growth for 10 years up to 5.4% a year. We still expect house price growth to slow towards 1% by the end of the year.

“The rush to beat the stamp duty deadline continues and sellers who agreed to buy a home in 2020 would reasonably expect to make the stamp duty saving.”