The high volume of activity across the housing market following a record year for property sales is currently eroding supply, Zoopla has warned.

The property expert stated that 2021 saw a total 1.5 million house sales – the highest number of transactions in any year since before the financial crisis.

According to the latest Zoopla House Price Index, the average house price in the UK climbed by 1% in the three months to December, taking the rate of annual growth to 7.4%. This rate of growth represents a fall from 7.7% in September, to leave the average UK house price at £242,000 – having risen £17,000 over the course of 2021.

Zoopla’s findings suggested that increased activity among first-time buyers, who were offered a way in to the market due to higher LTVs last year, as well as investors, who were taking advantage of the stamp duty holiday, meant that there was more “pure demand” in the market.

However, Zoopla has warned of a “significant imbalance” between supply and demand.

Zoopla Head of Research, Gráinne Gilmore said: “The pandemic ‘search for space’ continues, pushing demand for houses to record highs. Demand is also rising sharply for flats, with international demand, relative affordability and workers flowing back into cities all combining to energise this market.”

Looking at stock levels against a five-year average, Zoopla’s figures indicate they are -44% lower. However, this marks a slight turn around from late in 2021, when stock levels were down -47%.

While the property expert noted it is a relatively small change, it also revealed that valuation leads have jumped in the first few weeks of the year, signalling that supply levels could start to build this year, especially as the busy New Year period passes.

Commenting on Zoopla’s research, CEO of rental platform Canopy, Chris Hutchinson, added: “The government and housing industry must work together to improve people’s financial wellness and stability throughout their renting journey.

“Competition in the market is fierce with demand far out-weighing supply, so the importance of having an edge when looking to secure an affordable mortgage cannot be underestimated. For any renter whose end goal is homeownership, now is the time to start building a strong credit score and financial resilience.”

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