Britain's property market had the busiest start to the year since 2016, with sales agreed so far this year matching levels seen at the start of 2021.
As demand soars, the supply of homes for sale is beginning to turn a corner, with new listings of homes for sale at 5% above the five-year average, according to the latest data from Zoopla's house price index.
This meant that in January, half of all properties where sales were agreed were snapped up within three weeks of coming to the market, compared to a third of homes during the same period in 2021.
But, as demand continues to outpace supply, the average house price now stands at £244,100 ($326.211) — a rise of 7.8% in the year to the end of January, and a rise of around £80,000 over the last decade.
This is decline from 8% in December, and the three-monthly rise is at its lowest since August 2020.
Last year, some 1.5 million home sales were secured, even as stock levels declined. Zoopla anticipates 1.2 million home sales in 2022.
Zoopla warned that the rising economic headwinds, including the increasing cost of living and rising mortgage rates will start to put the brakes on house price growth. It forecast an average house price growth of between +2% and +4% at the end of the year.
"The sheer level of activity in the market in recent years eroded the stock of homes for sale," said Grainne Gilmore, head of research at Zoopla.
"The imbalance between high demand and supply will take much longer to unwind, and this imbalance will continue to underpin pricing in the coming year."
Despite total stock levels staying below the medium term average, this rise in new supply indicates green shoots of recovery for stock levels, with new listings rising for every house type in the first two months of the year compared to 2021.
The real estate firm said this signals a possible return to pre-pandemic stability for the rest of the year.
Zoopla expects the rate of annual house price growth to ease over the course of 2022, as economic headwinds, including mortgage rate rises and the rising cost of living, put the brakes on price rises.
"Overall, we forecast average price growth of 3.5% by the end of the year across the UK," she added.
Regionally, while lockdown-led demand hit stock levels throughout last year, new supply is up on pre-COVID levels for this time of year across four regions — Scotland, East Midlands, North East and Yorkshire — and is matching pre-pandemic levels in the North West and West Midlands.
Separate data from Nationwide showed average UK house prices exceeded £260,000 for the first time ever in February, climbing at an annual rate of 12.6%.
Analysts say despite the good start the trend is unlikely to last amid soaring energy prices, the cost of living crisis and geopolitical tensions.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "There’s a good chance that some of this was driven by the rate rise in December, and the worry that if they didn’t hurry up and make a move, they’d end up paying much more for a mortgage on their new home a few months down the line.
"But this is likely to be a short-lived phenomenon, because buyers are coming under increasing pressure. Even if they decide they can take the interest rate rises in December and February on the chin, rising prices may be enough to cool their enthusiasm.
"The war between Russia and Ukraine will have a major impact too, both on sentiment and on pushing these prices even higher.
"It could be the final burden that buyers decide they can’t bear, which calms the January flurry to barely a flutter as we go further into 2022.”