There is an “acute” shortage of homes available for sale, Zoopla said, with the market facing its greatest shortage since the property listing portal’s records began in 2015.
This comes as the average price of a house went up by 7.6% over the last 12 months.
Buyer demand remains strong, up 20.5% in July compared to the 2020 average.
Stock levels are down 26.4% compared to last year's average, and down even more (33%) compared “with the more normal” pre-pandemic markets of 2018 and 2019, Zoopla said.
New listings are running around 5% below average since the start of the year. Increased activity amongst first-time buyers and investors is absorbing stock while failing to replenish it.
An increased number of sales over the past 12 months (up 40% over 12 months to June, as per HMRC data) has eroded supply, with one in 20 homes changing hands over the past year, compared with one in 25 in 2019.
Investor demand is also up more than 21% compared with the 2020 average, boosted by stamp duty relief. Strong demand for rental properties is likely to continue, even as wider tax changes in recent years have caused some landlords to review their portfolios.
Once the impact of the stamp duty holiday wanes and government stimulus is withdrawn, Zoopla expects there will be “a gradual reparation of stock levels”.
Competition among buyers has been intensifying throughout the second half of 2020 and 2021, spurring the market to move faster – the time it took for a property to sell in 2021 was 26 days, down from 49 days two years ago.
Zoopla’s HPI report showed supply constraints are most pronounced for homes priced up to £350,000 ($480,403) – “reflective of where average affordability lies for UK homemovers.”
The demand for space continues to be on the rise, and the supply of three and four bed family homes is most stretched.
“The post-pandemic ‘reassessment of home’ – households deciding to change how and where they live - has further to run, especially as office-based workers receive confirmation about flexible working, allowing more leeway to live further from the office,” said Gráinne Gilmore, head of research at Zoopla.
“This means higher levels of demand will still be evident, and potential vendors with family houses to sell could be in pole position."
Meanwhile, headline rate of house price growth was up 6% year on year, but this is expected to moderate to between 4% and 5% by the end of the year.
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