Zoopla’s research team is anticipating the first quarter of next year will see the current boom continue as 100,000 additional sales try to complete ahead of the stamp duty deadline.
In its latest market snapshot the portal says although demand for housing has now fallen back since its late summer peak, it remains 34 per cent higher than this time last year.
“Demand levels are set to hold firm for the remainder of the year, and the monthly sales completions estimate suggests the strongest December – and run up to Christmas – for over a decade. We then anticipate a further demand spike in January 2021, as some buyers leave it late to enter the market in an attempt to beat the stamp duty deadline” says the portal.
The volume of new sales agreed is running 38 per cent higher than a year ago, adding to the pipeline of business set to complete in the first quarter of 2021. But it warns that of the new sales agreed in January, just half are likely to beat the stamp duty deadline based on evidence from previous years.
The year is expected to end with house price inflation reaching 4.0 per cent.
Meanwhile next year will see different phases, Zoopla says.
“Once the stamp duty holiday concludes at the end of March, we anticipate a slowdown in sales completions as the impetus to move amongst buyers motivated by stamp duty savings dissipates” it suggests.
This will have a knock on effect on transaction volumes in the second quarter of the year, which it forecasts will be 20 to 30 per cent below normal levels as stamp duty is reintroduced, before recovering slightly and running 10 per cent below 2019 levels for the second half of the year.
Zoopla’s anticipates house price growth across the country in 2021 - just 1.0 per cent on average - will run within a narrow range from 1.75 per cent in Scotland to just 0.5 per cent in the East of England and the North East.
“Central to our outlook is lower levels of turnover by long-run standards, which over time increases the scarcity of homes for sale. We expect the supply of properties for sale to moderate over 2021, which will restrict choice for consumers” it continues.
Richard Donnell, Director of Research and Insight at Zoopla, says: “It’s 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 per cent 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.”
He continues: “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 six per cent short of last year despite a two-month closure of the market in England.”
Donnell adds that there are obvious Covid-related challenges ahead but he says the impact on the housing market is less than in previous downturns as sales volumes have 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 1.0 per cent 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.”
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It will be the first time in history that house prices rise in line with unemployment; seems unlikely, and improbable to me. There are many factors that could cause a drop but not many that would cause a rise.
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