Third lockdown shakes the housing market

Seller hold back putting their home up for sale following third national lockdown ..

The third national lockdown has created a perfect storm for the property market, with a slowdown in the flow of new supply for sale as demand rebounds according to the latest findings revealed by Zoopla, the UK’s leading property portal, in its latest House Price Index.

Record COVID cases and calls to uphold social distancing appear to have made some would-be home sellers reluctant to list their property for sale. In the first weeks of 2021, the flow of new homes coming to the market for sale was 12% lower than 12 months prior.

By contrast, buyer demand for property has rebounded after the Christmas break – growing even faster than at the start of 2020. In the period to the 17 January, demand for homes was 13% higher than the same period a year ago when the market had started to rebound in the wake of the General Election. New sales agreed are also running 8% higher than last year.

While early January is typically one of the busiest times for new buyers, this year activity is compounded by the impact of the pandemic. With more time spent at home, and more pressure on homes to deliver than ever before, more homeowners have realised that their home falls short and have been galvanised to move. Rising house prices have also created more equity in people’s homes, adding further impetus – and financial ability – to move.

Despite the impact of third lockdown on new supply, house prices have reached an almost four year high at 4.3%. The highest since April 2017, with momentum coming from regions where housing affordability is most attractive, primarily northern English regions.

At a country level, Wales is the fastest growing market with prices rising at 5.4% year on year. At a city level, Liverpool is growing fastest with house prices +6.3% higher than a year ago – its fastest rate of growth for 15 years, since before the global financial crisis. Manchester is close behind with a growth rate of +6%, returning to levels of inflation last seen two years ago.

There are three regions where house price growth is at its highest for a decade North East, North West and Yorkshire and Humber – all are registering the highest growth since 2007, with prices currently rising between 4% and 5.5% a year. House price growth has also increased in southern regions of England but affordability pressures limit the scope for above average growth. Prices in London are +3.1% higher over the last year but this is way off the 20% annual growth rate recorded in July 2014.

Richard Donnell, Research & Insight Director, Zoopla, comments: “The housing market momentum built up in 2020 H2 has rolled into early 2021, despite a spike in the pandemic and a third lockdown. Sellers are more cautious however and appear to be waiting for case numbers to drop much further before listing their home, or until we see a return to tier based restrictions.”

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