Busy Christmas housing market means bumper filled New Year Q1

The first quarter of 2021 is set to record a property uplift, with 100,000 additional sales expected to complete before the end of March. As buyers rush to beat the stamp duty deadline, the increased transaction pipeline from the final months of 2020 will spill over into the new year, according to the latest findings by Zoopla, the UK’s leading property portal, in its monthly House Price Index.

The key findings from Zoopla’s House Price Index are as follows:

  • New sales agreed remain 38% higher than a year ago*, as strong demand and sales completion volumes indicate busiest market in the run up to Christmas for over a decade**
  • Last minute surge of buyers looking to beat stamp duty deadline expected in January but only half of deals agreed that month will likely complete before the end of March
  • House price growth is running at +3.5%, the highest for almost three years; 2020 projected to end with HPI of +4%
  • Completed sales to end 2020 6% below 2019 levels (an improvement on the original forecast of -15%) with London and southern England recording up to 7% more sales than in 2019
  • Longer market closures mean transaction volumes in Scotland, Wales and Northern Ireland will not close the gap on 2019
  • Demand for housing has dipped back to pre-Covid levels, but remains 34% higher than a year ago; there has been a rebound since the second lockdown started in England
  • Looking ahead, house prices are expected to grow by +1% by December 2021, when completed sales are expected to be in line with 2020 volumes. Without the strong Q1, sales would have been 9% lower as the economic impact slows the market
  • Sales completions expected to slow to 20-30% below normal levels once the stamp duty holiday ends, but with lower sales supporting pricing levels in 2021, and an absence of over-pricing, scope for price falls is limited

Richard Donnell, Director of Research & Insight, Zoopla, comments:

 “It has been a roller coaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30% higher than this time last year. House price growth has hit a three-year high and is set to increase further in the short term.

“The high volume of sales agreed this autumn will spill over as completed sales in 2021 and this will support the overall number of sales completed in 2021 at 1.1 million. It has been a remarkable turnaround and completed sales look set to fall just 6% short of last year despite a two-month closure of the market in England.

“There are some challenges ahead as the country battles the impacts of the pandemic on the economy and day to day life. The impact on the housing market is less than in previous downturns as sales volumes have already fallen in recent years and affordability levels are far from over-stretched. We expect housing demand to slow further over 2021 and this will ease the upward pressure on prices which we expect to be 1% higher by December 2021. Lower sales volumes over the second half of 2021 and a growing scarcity of supply will offset weaker demand and support headline pricing levels.”

References

*This compares week to 15th November 2020 to same week in 2019

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