1 in 16 private homes will have changed hands in 2021

Average UK annual house price growth was +6.9% in October, up from +3.5% in October last year. Although this is a slight easing from growth of more than +7% in August and September, the average rate of growth over the last three months is higher than at any time since 2014, underlining the strength of current market conditions. The trend for annual growth will be a continued slowing, although the path not may be linear. The easing in the pace of price growth is also signalled by quarterly growth slowing in October to 1.2%, half the levels of 2.8% registered in July. Wales continues to register the highest rate of house price growth across the regions, at +10.8%, followed by the North West at +9%. The market in London, which was most affected by the pandemic and subsequent lockdowns, is registering price growth of +2.3%. In a sign that growth is easing across the country, quarterly price growth has also dipped compared to the late summer in all regions.

Among the UK’s largest cities, Liverpool, Manchester and Sheffield continue to show the highest rates of growth, at 10.6%, 8.7% and 7.9% respectively. The only large city registering price falls is Aberdeen, where average values edged down 0.2% on the year. In line with forecasts, the rate of annual house price growth is set to moderate in the coming months and into next year, although we expect prices to end 2022 firmly in positive territory at 3%. As mentioned above, while we expect the headline index to slow, there may be monthly volatility. A key factor here is the uneven releases of official data on transactions, which will affect revisions to the index. Supply most constrained for houses House price growth is easing as we approach the end of the busiest market since 2007. One in 16 privately owned homes has changed hands this year, compared to one in 20 in 2019. Buyer demand remains higher than usual levels - continuing to run +28% higher than the five-year average. The new supply of homes being listed for sale has been running 5% to 10% below typical levels seen in 2017-2019 for most of this year. However, the total stock of homes for sale is down more than 40% on the five-year average.

As outlined in our forecasts report last month, we expect house prices to rise by 3% next year, and forecast 1.2 million transactions, down from 1.5 million this year, but in line with the average number of transactions over the last five years.

New supply will start to rise at the turn of the year as households use the holiday period to make a decision around making a move. In typical years, the highly seasonal supply of homes being listed for sale slows in the run up to Christmas, but rises sharply in the new year. On average, the supply of listings at the end of January run some 50% higher than the start of December. Those wanting to move home should contact agents in advance of the holiday period to ensure their home is ready to list at the start of 2022, to get ahead of the competition. Buyer demand will remain strong moving into next year, but as the market starts to normalise in 2022, in terms of the mix of buyers, there may be more churn and slightly less demand from those with nothing to sell, such as investors and first-time buyers.

As outlined in our forecasts report last month, we expect house prices to rise by 3% next year, and forecast 1.2 million transactions, down from 1.5 million this year, but in line with the average number of transactions over the last five years.

Executive summary

• One in 16 privately owned homes will have changed hands this year, making it the busiest market since 2007

• Average house prices are up +6.9% on the year, as pace of growth starts to ease

• The average value of houses (from terraced to detached) are up +8.3% on the year, double the five-year average of +4.2% growth

• Average apartment values are up +1.6%, just above the five-year average of +1.2% annual growth

• Total supply of homes is -42% below the five-year average, but for houses, stock volumes are -55% lower

• New supply will pick up pace in the New Year, easing some of the stock constraints