Housing market on course for busiest year since 2007
By David Wood | 26th May 2021
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.
Property website Zoopla predicts 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 Zoopla's 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'.
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.
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.
Gloucester is among the places identified by Zoopla where the property market is slower than a year earlier, along with places such as Southampton and Aldershot, bucking the wider trend of faster moving markets. However, annual price growth is on the rise in all these cities.
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, said: "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."
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