As the rollercoaster year draws to a close, the total value of homes changing hands in 2020 is 26% higher than in 2019, according to our House Price Index.
The total value of homes changing hands is set to jump by £62bn in 2020 as buyer demand soars by 40%.
Sales have been agreed on more than £300bn worth of property this year, that's 26% higher than in 2019, as successive lockdowns have caused people to re-evaluate their housing needs.
The high levels of buyer demand, combined with a shortage of homes for sale, has pushed annual house price growth up to a three-year high of 3.9%.
The jump leaves the average home costing £222,900, according to our latest House Price Index.
What’s happening to house prices?
UK house price growth has increased to 3.9%, its highest level since August 2017, and up from 1.3% a year ago.
The impetus for the growth is coming from northern England and Wales, where property remains more affordable.
All cities monitored by our House Price Index recorded annual gains apart from Aberdeen, where prices dropped by 2.6%.
Is buyer demand still strong?
The housing market looks set to end the year on a strong note, with buyer demand currently 33% higher than it was in December 2019, as the market defies the traditional seasonal slowdown.
The pandemic has driven a ‘seismic’ search for space and quality location. And demand for family housing with gardens, parking and extra space to work from has continued to rise.
Despite the shutdown of the housing market earlier this year, the ‘once-in-a-lifetime’ reassessment of property has seen buyer numbers soar by 40% across the whole of 2020, compared with the previous year.
What’s happening with property sales?
The strong levels of demand are proving to be committed, rather than speculative, and are converting readily into sales agreed.
Sales levels have jumped by 9% during 2020, compared with 2019, although with transactions taking three to four months to complete, a portion of these will spill over into 2021.
The rebound in sales has been strongest in the south east and eastern England, where they are more than 20% higher than in 2019.
But the strong demand has not been matched by an equal rise in new listings, with the number of properties for sale increasing by only 4%, creating a mismatch between supply and demand and putting upward pressure on prices.
What’s next for the housing market?
Housing market activity remains well above normal levels for this time of year, and this momentum is expected to lead to a strong start in 2021.
Looking ahead, our research and insight team expects annual house price growth to reach 5% in February, before slowing to 1% by the end of 2021, as demand starts to weaken during the second half of the year.
Buoyed by the strong start to the year, the number of completed property transactions is likely to be broadly similar to this year at 1.1 million.
Richard Donnell, director of research and insight at Zoopla, said: “The ‘once-in-a-lifetime re-assessment of housing’ kickstarted by the pandemic has further to run in our view and this will support demand into 2021.
“With a long Christmas weekend, and many households isolating in smaller groups, we expect interest in housing to be stronger than usual ahead of the traditional Boxing Day bounce, when interest in housing jumps.”
But Donnell warned that while market activity is being boosted by latent demand unlocked by the pandemic, the housing market is not immune to economic forces and rising unemployment.
He added: “Economic pressures are already impacting in parts of the market, reducing the volume and share of sales in less wealthy areas, for example.”