Eyeing a home move? In our video, Zoopla’s head of research, Gráinne Gilmore, gives the lowdown on the housing market, from house prices to the stamp duty holiday.
Q. Gráinne, how are the first few weeks of the year shaping up?
A. It has been a fast start in the market in 2021. Demand for property after Christmas has rebounded even more quickly than at the start of 2020 as buyers try to beat the stamp duty holiday deadline.
Our data shows that demand for homes between Boxing Day and 17 January was running 13% higher than the same time a year ago, with the number of new sales agreed also up 8%. This trend is broadly uniform across all regions and countries.
Q. What impact is the third national lockdown having?
A. The third lockdown is exacerbating a supply/demand imbalance in housing.
Buyer demand continues to gather pace. But it is more than the stamp duty deadline motivating movers. While early January is typically one of the busiest times for new buyers, this year’s activity is compounded by the impact of the pandemic.
Successive lockdowns and restrictions mean that people have been spending more time at home, and this is making some homeowners reassess the space and location of their home. It has been the catalyst for a lot of movement.
At the same time, high numbers of Covid-19 cases and calls to uphold social distancing have prompted some sellers to press pause on opening their homes for viewings and listing their property for sale at present.
If sellers remain cautious and the supply of homes for sale scarce, the choice for buyers will be limited, which will continue to put upward pressure on prices.
We expect the sellers currently putting sales on hold to continue with their sale as Covid-19 case numbers start to fall sharply or we move back to regional tier-based restrictions.
Q. So pandemic-led restrictions are making some sellers reluctant to list their homes for sale. Are there any areas that are bucking this trend and why?
A. We’ve seen a rise in the supply of homes for sale in London. This is likely driven by some flat-owners looking to move into more spacious homes or move further out of the city.
Also, there could be some rental properties being sold as landlords keep an eye on any potential tax changes around capital gains tax (CGT) for investors. These have not been announced or signalled by Chancellor Rishi Sunak, but the Office of Tax Simplification has recommended to Sunak that the rules should change.
This could create more choice for buyers. Yet, even with this rise in supply in London, prices are continuing to climb, up 3.1% in 2020.
Q. At a UK-wide level, house prices are continuing to rise. Where are the hottest local markets?
A. Despite the third lockdown, UK house prices are close to a four-year high of 4.3%, the highest level since April 2017. Momentum for this is coming from Wales, northern England and Scotland, where demand is strong and affordability levels are higher.
House price growth has now hit a 10-year high in three regions: north east, north west and Yorkshire & Humber, with prices currently ranging between 3.7% and 5.4% year-on-year.
At a country level, Wales is the fastest-growing housing market, with annual prices up 5.4%. And at a city level, Liverpool has experienced its fastest rate of growth for 15 years – since well before the global financial crisis.
While house prices have increased in southern regions too, affordability pressures are limiting above-average growth.
Q. The stamp duty deadline is just months away now. What does this mean for buyers and sellers?
A. There’s a lot of focus on the deadline. With more sales in the pipeline than previous years, the average time it takes from agreeing a sale to completing it is approaching four months – up by two weeks.
We estimate that up to 70,000 sales agreed in 2020 may miss the deadline. There may be a case for a short, month-long extension to help buyers get their purchase over the line. A petition calling for an extension gathered enough signatures for it to be debated by MPs recently.
At present, we expect around half the sales agreed in January will meet the deadline.
As ever with the end of a stamp duty holiday, there may be a slowdown in activity immediately after the tax break window ends, but we do expect activity to continue, with total transactions this year matching those seen in 2020.
Thank you Gráinne.
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