Q&A: 'Homeowners will increasingly feel more comfortable actively marketing their homes'

A. The Chancellor made a number of announcements at the Budget, with a stamp duty holiday extension and a new 95% mortgage guarantee the most eye-catching for home movers.

The impact was felt almost immediately, with a 24% spike in interest from people looking to buy a new home in England and Northern Ireland in the week following the Budget.

Overall buyer demand was 80% higher in that week compared with the same time period over the previous four years.

The largest post-Budget bounce in demand was for three-bedroom houses – these family homes are still the most sought-after property type in the UK.

But there was also an uplift in demand for one and two-bedroom flats in London and the south east too, suggesting that first-time buyers are taking a keen interest in the housing market once again.

There was a slight increase in the number of homes being listed for sale after the Budget, but overall levels of supply remain deeply constrained.

A. Multiple lockdowns have led many people to re-assess their homes and lifestyles – and in turn, look for homes with more space, both inside and out. 

This search for space is driving continued demand for family homes, which means prices for houses are rising faster than flats.

Across the UK, the average price for a house has climbed by 4.9% over the last 12 months, compared with a 1.9% increase for flats.

Prices have risen most strongly in Wales and the north west, where the average value of a house is up 6.2% on the year. By comparison, price growth for flats stands at 3.5% in Wales and 1.8% in the north west.

This search for space means that houses are selling more quickly too, taking an average of 42 days to sell across the UK, compared with 62 days for flats.

Overall, the housing market is moving faster than it was 12 months ago. The average time to sell a home in the UK (from listing a property to agreeing a sale) has fallen by nearly a week, from 50 days in 2020 to 44 days.

The only exception is London, where homes are taking longer to sell than they were last year. This reflects both how strongly London’s housing market bounced back in early 2020 but also points to how successive lockdowns have hit the residential market, particularly in the heart of the city.

A. The number of homes being listed for sale is not keeping pace with very high levels of demand, with overall supply levels down 13% compared with the average for 2020.

However, as pandemic restrictions are easing, and the vaccination programme continues to roll out, homeowners will increasingly feel more comfortable actively marketing their homes.

It’s worth noting that the return of first-time buyers to the housing market will keep pressure on the imbalance between buyer demand and the supply of homes for sale, as aspiring homeowners have no property to sell. This will exert upward pressure on house prices.

A. At a national level, annual house price growth stands at 4.1%, up from 1.8% recorded in the same period in 2020. That’s equivalent to an increase of £8,907 on the year or £750 per month.

House price growth is at an almost 10-year high in the Midlands, north of England, Wales and Scotland, where property is more affordable.

At a city level, Liverpool and Manchester continued to lead the way when it comes to the rate of house price growth, up 6.6% and 6.4% respectively.

Meanwhile, homes in Manchester and Bristol have risen the most when it comes to monetary value, up by almost £1,000 per month since the start of the pandemic.

A. At the Budget, the Chancellor announced that the stamp duty holiday on homes worth up to £500,000 would be extended to the end of June and the holiday would continue on the first £250,000 of any purchase until the end of September. 

We estimate that there are around 130,000 homes currently for sale across England that will be stamp duty-free until the end of September.

Buyers in the north east, north west and Yorkshire & the Humber have more opportunity than anywhere else in the country to buy a home free of stamp duty before the end of September, with more than two-thirds of homes currently listed for sale in these regions under the £250,000 stamp duty holiday extension threshold.

Overall, at least half a million buyers will benefit from some level of stamp duty saving this year.

A. We expect a continuation of this trend of homeowners carrying out a once-in-a-lifetime reassessment of their homes.

The gradual easing of lockdown and the drop in the number of Covid-19 cases are set to encourage more homeowners to list their homes for sale and invite viewings in the months ahead.

And while this will help boost the level of homes for sale, it could also put increased pressure on completing sales in a timely way. This is worth bearing in mind for people hoping to take advantage of the stamp duty holiday extension.

A. Our data signals that first-time buyers are becoming more active in the housing market.

Their capacity to step onto the housing ladder is now being boosted by an increase in the number of mortgages available for people with small deposits.

Several lenders are offering 95% mortgages, with others set to launch similar deals as part of the government’s new 95% mortgage guarantee scheme.

A. This activity, combined with the continued search for space and the stamp duty holiday extension, will encourage home moves up to the end of June.

However, the process of fully re-opening the economy is unlikely to be simple or smooth, and this will have a knock-on effect for the housing market more generally. We still expect house price growth to moderate later in the year.

Thank you Gráinne.

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