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23 Mar 2021

Strongest Start to Spring in Decade: Demand Soars 34%

This is the strongest start to the spring season for sellers in a decade – as demand soars by 34%. At the Spring Budget, Chancellor Rishi Sunak announced a range of measures to support home buyers. The aid includes an extension to the stamp duty holiday deadline and a new 95% LTV mortgage guarantee scheme. The mortgage scheme will be available from 1 April 2021 and will further boost market activity as people rush to secure homes with smaller deposits.

Following the Budget earlier this month, buyer demand rose rapidly by 34%. Search enquiries are reaching record high levels as first-time buyers and movers take advantage of the new measures. Interestingly, figures from Zoopla’s House Price Index reveal a surge in demand for one and two-bedroom flats.

A Strong Season Brings a Spring in the Step for Sellers

The supply and demand imbalance remains unchanged. In comparison to 2020, the number of houses available to purchase has dropped by 13%. Particularly because homeowners are not comfortable inviting potential buyers for viewings amidst the pandemic. We predict this will not continue for much longer. Levels of supply will increase as the COVID vaccine rolls out across the UK. As more people receive the vaccine, sellers will be more likely to hold viewings. Therefore, increasing the supply of homes in the market and widening the options of properties available for buyers.

This is the strongest Easter period for sellers in a decade – there has been a growth in asking prices, due to the smaller number of sellers in the market. Although availability is limited, search enquiries have hit a record high. The market gaining momentum coupled with the vaccine roll out will put a spring in the step of sellers. Record high levels of demand in conjunction with extremely low-interest rates have resulted in the greatest difference in supply and demand in the past decade.

Demand Continues to Soar

The northern region will benefit greatly from the three-month stamp duty holiday extension to September. More than two-thirds of homes in the north are currently listed below the stamp duty threshold of £250,000. A higher number of properties in Yorkshire and the Humber, North East, North West, and the Midlands have zero stamp duty charges. Therefore, the upward pressure on house prices will continue on these desirable properties. Many people questioned the elevated levels of market activity and wondered if the stamp duty deadline would leave a ‘cliff-edge’ in June. However, buyers now have more time to secure the savings on offer, boosting demand.

Strongest Spring Season in Decade, Stamp Duty Extension

 

Despite Limited Supply, Properties are Selling Faster

Demand in the market shapes the sales activity funnel. In 2020, the average time taken to agree on a sale was 50 days. This figure has now dropped to just 44 days. Property sales are being agreed upon faster than before due to the sheer levels of demand. Across all regions, properties are selling faster than last year. However, trends are reversed in London as it is now taking more time to agree on a sale. This is primarily because of the pandemic. A rise from home-working and travel restrictions has forced people out of the city centre where rents are exceptionally high.

Price Growth Above 4% for the 4th Consecutive Month

The annual growth rate reaches 4.1%. Therefore, marking the fourth consecutive month house price growth remains above 4%. Levels of growth are similar to those seen in summer 2017. Growth ranges from 5.7% in Wales and 5.3% in the North West to just 2.3% in London. London faces a slower growth rate due to the increase in levels of supply outweighing demand. The average UK house price continues to climb and now sits at £226,400. The table below shows the price growth for the Top 10 cities in the UK, with Manchester taking the lead.

Strongest Spring Season in Decade: city growth

*Figures from Zoopla UK house price index

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