House price growth is starting to slow, Zoopla has said, as households face a squeeze on their finances and the supply of properties coming onto the market increases.

The availability of homes for sale is on an upward trajectory, with new listings of properties for sale running at 5% above the five-year average.

With the supply-demand imbalance narrowing, according to the property portal, the data provided shows that house price growth eased slightly to 7.8% in January, down from 8% in December.

However, Zoopla points out that the market is highly localised, with rises of 16.6% in Powys in Wales to declines of -2.2% in the City of London

New listings have risen for every property type in the first two months of the year compared to 2021 – but particularly for three- and four-bedroom detached family homes compared to the same period last year

In January, half of all homes listed for sale were purchased within three weeks of coming to market, compared to a third of properties during the same period last year

The average house price across the UK is now £244,100, a rise of around £80,000 over the last decade

The recent rise in new supply indicates green shoots of recovery for stock levels, signalling a possible return to pre-pandemic stability for the rest of 2022, Zoopla said.

This means that new listings have risen for every property type in the first two months of the year compared to 2021.

But the latest data for January and February now also shows a rise in the supply of larger three and four-bed detached family homes coming on to the market, compared to the same period last year. This is finally answering the ongoing demand for three-bed homes, which continue to be the most sought-after property in the country.

While lockdown-led demand eroded stock levels throughout 2021, new supply is up on pre-pandemic levels for this time of year in four regions – Scotland, East Midlands, North East and Yorkshire – and is matching pre-pandemic levels in the North West and West Midlands.

However, as demand continues to outpace supply, the average house price now stands at £244,100 – a rise of 7.8% in the year to the end of January.

Grainne Gilmore, head of research, Zoopla, commented: “The sheer level of activity in the market in recent years eroded the stock of homes for sale. But the data indicates that more homes are now coming to the market, as movers and other owners list their properties for sale – and this will create more choice for the many buyers active in the market. However, 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.

“Even so, we expect 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. “