Market frenzy to last until spring at least says Rightmove

If you fear the market will slow after Christmas, think again - Rightmove is expecting several months of frenzied transactions to come.

The portal is forecasting a robust four per cent average house price growth in 2021 across the UK as a whole, after ending 2020 some 6.6 per cent higher.

And it says the current stamp duty holiday has undoubtedly added some extra momentum, but buyer demand was already very high even prior to its announcement in July.

Rightmove reports that sales remain resilient now, 53 per cent higher than this time a year ago, despite the decreasing likelihood of completion by March 31 if a sale is agreed now. 

“Our 2021 forecast of a 4.0 per cent price rise is more conservative than the unsustainable 6.6 per cent national average seen this year” says Tim Bannister, Rightmove’s Director of Property Data.

He continues: “There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree to compensate for the higher tax, and indeed many sellers may be prepared to help to mitigate their buyer’s financial loss. 

“First-time buyers will remain largely exempt, so in most cases will be no worse off. The maximum savings of £2,450 in Wales or £2,100 in Scotland are considerably less decisive than the £15,000 available in England for a house costing £500,000 or more, which does however only apply to a small part of the market.”

Today’s latest Rightmove report says around 130,000 sales were agreed over the last month, up by no less than 44 per cent on the same period in 2019. 

A month ago Rightmove said there were 650,000 sales agreed and in the pipeline, many aiming for completion by March 31  to qualify for stamp duty savings. 

One month on - and a month closer to that deadline - the figure remains at around 650,000 because 130,000 additional sales have joined the processing logjam and replaced the 130,000 completions or fall-throughs that have taken place in the last month.

Rightmove anticipates there will be a slower second quarter once the stamp duty holiday is over, though cheap mortgage rates leave scope for further modest price growth despite the loss of the tax saving.

Indeed all regions have seen far greater average price increases than the average savings in stamp duty, indicating affordability headroom. 

“Pandemic-related uncertainties have been around for nearly a year, and Brexit uncertainties for far longer, and record activity month after month has proved that movers are willing and able to act on their new or existing housing priorities” says Rightmove.

Demand has therefore exceeded supply in 2020 with the number of properties coming to market for the year to date down by 0.6 per cent on the same period in 2019, and the number of sales agreed up by 8.3 per cent. As a consequence the number of available properties for sale is at a record low, indicating scope for some further modest price increases overall in 2021 despite those uncertainties.