Strong bounce back in demand this year up 50% on usual levels as buyers search for more space in cities and suburbs as offices reopen.

As the pandemic lockdowns come to an end and offices begin to reopen, demand from first time buyers and home movers for properties is up 50% for the year compared to usual levels, according to Zoopla.

The Strongest demand is for cities and wider suburbs including flats such as Thurrock in Essex, the suburbs of Birmingham and Glasgow as well as Barking & Dagenham in East London.

House prices are higher by 7.4% or £17,000 in 2021 with average property values of £242,000 compared to a rise of 4.2% during the first lockdown year.

If you have an interest only mortgage, rising property values mean an equity release buyer can repay the loan with a lifetime mortgage and take extra cash at current low interest rates.

Demand for undervalued flats

In the first few week’s of 2022 demand reached new highs for family houses as home movers searched for more space and flats offering value as prices were up only 1.9% on average for the top 20 cities.

Strong demand for detached family homes in cities and commuter areas rose 8.0% over the year as the pandemic changed working patterns for office-based workers.

There is more interest from pent-up international demand as global travel opens up with London benefiting from investors or those buying to live in the capital.

Demand for flats in London is the highest since April 2020 as prices have remained unchanged in the last 12 months offering value, compared to semi-detached houses rising 6.0%.

Across London prices are higher by an average of 2.6% with a third of the capital’s boroughs up over 4% including Bexley, Havering and Bromley.

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The highest house price growth is the region of Wales up 11.3% with average values in Powys rising 14.4% during the year, Carmarthenshire increasing 13.7% and Neath Port Talbot up 13.4%.

In the North West averages prices rose by 9.2% with large cities of Liverpool up 10.7% and Manchester up 8.7% with the regions of Oldham and Rochdale with growth over 11%.

Supply of homes starting to return

The lack of supply of homes has been impacted by the record demand with 1.5 million sales in 2021, the highest level since before the 2008 financial crisis.

As lenders offered higher loan to values, demand from first time buyers increased and investors took advantage of the government’s stamp duty holiday to buy property.

There remains an imbalance between supply and demand and stock levels are -44% down on the five-year average although this has improved from -47% during 2021.

Rather than selling, remortgage buyers can stay where they are and with the higher property values access a further advance for more indoor space adding a loft conversion or extension.

The level of supply and demand is tracking at usual levels and there is a more regular balance for property type with the highest demand for three-bedroom houses.

Rates remain near all time low levels with the average five-year fixed mortgage with 25% deposit at 1.59% which could rise due to inflation and the rise of Bank of England base rates.

What are your next steps?

Speak to our LCM mortgage advisers if you are moving home and looking for a competitive mortgage deal. Learn more by using the property value tracker chart and equity release calculator.

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If you repay an interest only mortgage using equity release, we can recommend the products to meet your needs so begin your equity release quote for the latest provider offers.