473,000 more transactions expected to complete in 2021, lifting the total value of sales to £461bn ..
UK property market momentum continues at pace with new projections from Zoopla showing that home sales this year are expected to exceed the last market peak, which preceded the Global Financial Crash, in 2007 as revealed in its monthly House Price Index..
Sales market momentum expected to hit a 14 year high
Sales transactions are expected to reach 1.5millon in the year to December, up 45% compared to 2020, according to Zoopla projections. While the total number of transactions in 2020 was curtailed by market closures during the initial lockdown, average annual transactions over the previous decade have rarely exceeded 1m – 1.2m. Sales of 1.5m would mark 2021 as the busiest sales market since the peak that preceded the Global Financial Crash, and one of the ten busiest years since 1959.
The volume of activity is being matched by an increase in the value of transactions. The value of homes sold in 2021 is expected to reach £461bn – up 46% or £145bn compared to 2020, and 68% compared to 2019. While acute market activity is driving the total value of sales, more expensive homes are also changing hands amid the ongoing ‘search for more space’.
However, while the market is on a sustained upward trajectory, the total number of homes available to buy is down 20.8% in the year to mid-May, compared to the average last year, and these forecasts come even as activity is likely to be hampered by supply constraints.
Wales, Yorkshire & the Humber, and the North West are the hottest markets
At a regional level, the sales markets in Wales, Yorkshire and the Humber, and the North West have seen activity speed up the most, with the time between listing a property and securing a sale subject to contract (SSTC) down between 10 and 15 days compared to the 2017-2019* average. These regions are also recording the strongest price growth (see figure 2).
At a city level, property in Wigan, Barnsley and Burnley are going under offer significantly faster. A typical property in these markets is selling three weeks faster than in 2017-2019. Annual price growth is also rising above the UK average in these cities at 5.8% or over.
While the overall UK picture is positive, there are variations at a city level. Inner London is a case in point, with prices almost unchanged year-on-year (+0.3%), and property taking almost two weeks longer to go under offer compared to 2020. At a borough level, average prices are falling in the City of London (-2.5%), Kensington & Chelsea (-1.7%), the City of Westminster (-2.2%), and Hammersmith & Fulham (-1.4%), which is a reflection of the softening of demand in inner city London at the peak of the pandemic. Inner London isn’t in isolation however, and there are other cities across the UK bucking the trend of faster moving markets. Property in Southampton (+1 day), Gloucester (+2 days), Edinburgh (+2 days), and Coventry (+8 days), are all spending longer on the market. However, house price growth remains positive across all of these cities.
House price growth almost doubles over the past 12 months
In a further signal that the market is running at pace, annual house price growth has almost doubled over the past year. In April, house price growth reached 4.1% – up from 2.3% in April of 2020. Price growth is at its highest in areas where affordability is greatest. At a regional level, house price growth is led by Wales, up 6.3% year on year, and Yorkshire & the Humber, up 5.4% over the same period.
At a major city level, Liverpool (6.9%) and Manchester (6.8%) are registering the highest levels of growth for the fifth month in a row – twice the rate recorded in the normal markets of 2017-19, and amid a 10% decline in the volume of homes available to buy. By contrast, London continues to trail when it comes to house price growth and, at 1.9%, is the slowest regional rate of growth across the UK for the sixth consecutive month.
Grainne Gilmore, Head of Research, Zoopla, comments: “Demand levels have moderated since the peak in Q1 as the economy opens up and life starts to return to some sort of ‘normal’. The easing of lockdowns will continue to cause a natural fall in demand as people are able to see family and enjoy amenities that have been shut for more than a year, but new buyer demand will still emerge throughout H2 as office-based workplaces confirm if they will be pursuing more flexible working practices. 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.”