The stamp duty holiday and the pandemic-led 'search for space' are set to lead to the highest level of homes changing hands for 14 years.
The housing market is on course for its busiest year since the global financial crisis as the scramble for properties continues.
More than 1.5 million homes are expected to change hands this year, a staggering 45% more than in 2020, according to our latest House Price Index.
With the number of housing sales each year rarely exceeding 1.2 million over the last decade, this would mark the highest level of housing market activity since 2007.
As well as breaking a recent record, 2021 looks set to be one of the top 10 busiest years since 1959.
Meanwhile, the total value of homes sold in 2021 is expected to reach £461bn – up 46% or £145bn compared with 2020, and 68% compared with 2019.
While this is largely being driven by the sheer volume of homes changing hands, it is also due to more expensive properties selling amid the pandemic-led 'search for space'.Download the full report
What’s happening to house prices?
House price growth has almost doubled during the past year to stand at 4.1% in April, up from 2.3% in the same month of 2020, as demand from potential buyers continues to outstrip the supply of homes on the market.
House price growth is strongest in areas where affordability is greatest. Wales leads the way at a regional level, with house prices up 6.3% year-on-year, followed by Yorkshire and the Humber at 5.4% and the north west at 5.3% respectively.
At a major city level, Liverpool and Manchester have seen the highest levels of house price growth for the fifth month in a row at 6.9% and 6.8% respectively – twice the level recorded in the more normal markets seen between 2017 and 2019.
However, price growth is slower in southern regions where affordability is more stretched.
London recorded the slowest regional rate of house price growth for the sixth month running at 1.9%, well below 3.5% seen in the south west and east of England.
House prices in the heart of London are almost unchanged year-on-year. And a number of boroughs have actually seen price falls, reflecting the softening of buyer appetite in the capital during the peak of the pandemic.
Property values are 2.5% lower than a year ago in the City of London, while in the City of Westminster they are down 2.2%, and in Kensington and Chelsea, and Hammersmith and Fulham they have dropped by 1.7% and 1.4% respectively.
How busy is the housing market?
The level of buyer interest in homes on the market is currently 29% higher than it was in 2020.
It's fuelled in part by the extension of the stamp duty holiday until the end of September as well as the ongoing 'search for space', with many people carrying out a once-in-a-lifetime reassessment of their homes and lifestyles in the wake of multiple lockdowns.
First-time buyers also now have a wider choice of mortgages available to help them onto the housing ladder.
Unfortunately, the high level of buyer demand is not being matched by the volume of homes for sale, with supply 20.8% lower than last year, putting further upward pressure on prices.
Where are the hottest markets?
Wales, Yorkshire and the Humber, and the north west are the hottest regional housing markets. The time it takes between marketing a property and agreeing a sale in these locations is 10 to 15 days faster than it was in 2017 to 2019. These regions also have the strongest house price growth.
The ‘hottest’ city markets, where homes are being sold more quickly and price growth is strongest, include Wigan, Blackburn and Burnley. A typical property in these markets is selling three weeks faster than in 2017 to 2019, and annual price growth is at least 5.8%.
At the other end of the spectrum, homes in the heart of London – where house prices are almost unchanged on an annual basis – are taking nearly two weeks longer to go under offer.
The property market is also slower than a year earlier in Aldershot, Coventry, Edinburgh, Gloucester and Southampton, bucking the wider trend of faster moving markets. However, annual price growth is on the rise in all these cities.
What this could mean for you
First-time buyers are continuing to head back to the housing market, boosted by increased mortgage availability, thanks in part to the launch of the government’s new 95% mortgage guarantee scheme.
This rise in activity, combined with the shortage of homes for sale, means you could face stiff competition from other buyers.
You may face less competition if you are looking for a flat although it is still the most popular property type in London.
Strong buyer interest in homes on the market, particularly three-bedroom family homes, means existing homeowners are in poll position if they are looking to sell and move up the housing ladder.
With potential buyers currently significantly outstripping the number of properties on the market, you could achieve both a good price and a quick sale for your existing home.
And you could benefit from the stamp duty holiday when you buy your next home if you start your search now.
On the flip side, you are also likely to encounter strong competition from other buyers when it comes to your next property, particularly if you are looking in one of the ‘hot’ markets in the north west, Yorkshire and the Humber or Wales, or you want a larger family home.
However, more homes are expected to be marketed for sale in the coming months as lockdown restrictions continue to ease and vaccines are rolled out further.
What’s the outlook?
Going forward, the level of buyer demand is expected to ease slightly as lockdown restrictions continue to be lifted and people spend time seeing family and enjoying leisure activities that they have not been able to do for a while.
That said, it is expected to remain strong during the second half of the year, driven in part by office-based workplaces confirming whether or not they will continue to offer flexible working practices.
Grainne Gilmore, head of research at Zoopla, says: “Households who have the opportunity to commute less frequently have more options when it comes to choosing where to live, and this could prompt a move.
“Likewise, older households will continue to review how and where they are living, with many more set to move for the first time in years.
“With an increased array of mortgages to choose from, first-time buyers will also remain active in the market.
“At the same time, supply constraints will continue to underpin pricing. The lack of supply is expected to hamper potential sales during this year, yet even so, we expect total transactions this year to rise to 1.5 million, marking one of the busiest years in the UK’s residential market in more than a decade.”
How Zoopla can help
- Thinking of selling? Use My Home to find out how much your existing property is likely to be worth, giving you an idea of how much you can afford to spend on your next property.
- Searching for a home to buy? Get ahead by registering with Zoopla and signing up for our property alerts, enabling you to find out as soon as a home meeting your criteria comes on to the market.
- Whether you're buying or selling, speak with local estate agents to get expert market advice.
Top three takeaways
- The housing market is on course for its busiest year since the global financial crisis.
- More than 1.5 million homes are expected to change hands this year, 45% more than in 2020 and the highest level for 14 years.
- House price growth has almost doubled during the past year to stand at 4.1%.