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Market Update

Market Update

As the post-pandemic search for space continues, I thought it would be useful to provide a current overview of the market. Currently, homes are selling faster now than during ‘normal’ market conditions and with constrained supply in most areas, sellers are in a prime position.

The average annual UK house price growth is up 4.1% (up 3.7% in the South East) and new forecasts from the Zoopla House Price Index show that the number of sales completions will rise to 1.5 million this year; the highest level since 2007. The tsunami of activity has been underpinned by a combination of households reviewing how and where they live, and the much debated stamp duty holiday.

The stamp duty holiday unveiled by Chancellor Rishi Sunak in July 2020 offered a total tax saving on properties costing up to £500,000 and a reduction on homes costing more than that. It prompted a surge of activity, causing a gulf between the number of house hunters in the market and properties for sale to grow to the widest in eight years. Whilst the ending of stamp duty relief at the end of June will of course impact the market, there are many other factors that will continue to push prices this year, including shortages of homes for sale, big increases in average household savings over the past year and people’s new property needs in the post-pandemic world. Also supporting the continued momentum of the property market, is the mortgage guarantee scheme that aims to help first-time buyers get their foot on the property ladder. The scheme incentivised lenders to provide mortgages to first-time buyers, along with current homeowners, with 5% deposits on properties worth up to £600,000. Therefore, I predict that the despite the end of stamp duty relief, the housing market is set to remain busy through to Q4 of 2021.

However, despite the value of sales in 2021 forecast to be £461 billion, a massive increase of 68% from 2019, high sales volumes are eroding the supply of available properties, with a demand/supply imbalance increasingly focused on family homes. The total stock of homes for sale remains constrained and is down 20.8% compared to the average last year. Selling like hot cakes, Rightmove found that the average time to agree a sale in April 2021 was just 45 days, almost half of the time (83 days) that it took to sell just a year before in April 2020. Some agents have even reverted to the traditional practice of creating a hot list of able buyers who can act quickly.

Also basking in the increased movement of the property market and supported by the supply/demand imbalance, rental growth has reached the highest level in four and a half years. In the central zones of our major cities, during lockdown as demand eased and supply increased, there was negative pressure. However, as of May 2021, demand is beginning to build once more in the city centres.

The bottom line? Despite buyer demand looking set to ease as the economy slowly opens up, it will remain elevated compared to previous years, with anticipation that it will create one of the busiest sales markets in more than a decade.

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