Fuelled by the pandemic-led search for space, one in every 50 homes was sold between 1st January and 15th April ..
The UK housing market has recorded £149bn worth of property sales in the first 15 weeks of 2021, equating to almost double the value of homes sold in the same period in 2020 and 2019. These are the latest findings from Zoopla, the UK’s leading property portal, in its monthly House Price Index.
Fuelled by the enduring ‘search for space’ that emerged during the pandemic and shaped the market over the past 12 months, the rate of property sales has also doubled. One in every 50 homes was sold between 1st January and 15th April, up from one in every 100 homes during the same period last year. Running six weeks ahead of a typical year, this level of sales wouldn’t normally be achieved until the end of June. Acute market activity is eroding the volume of homes for sale, with the total number of homes available to buy (and not yet under offer) down nearly 30% in the first half of April compared to average levels in the same period during 2017-19.
Glasgow, Bristol, Nottingham, Stoke, and Middlesbrough are the top five busiest sales markets in the UK.
House price growth tracked at 4% in March of this year, down from 4.5% recorded in January of this year. While this indicates a slight softening in pace of growth (and the slowest rate of growth since October), house prices remain almost double the 2.1% growth recorded in March 2020, upheld by lack of supply coming to market. Meanwhile, Manchester, Liverpool, Leeds, Nottingham and Leicester are each registering house price growth in excess of 5% year on year.
Market depleted of family homes, with supply squeezed to a five year low
The supply of new homes for sale has proved to be a casualty of the extreme market momentum, and in the first half of April, the number of homes available to buy was 30% lower than the level of stock recorded during the same period in the comparatively ‘normal’ markets of 2017-19. Furthermore, the total number of homes listed for sale in the year to date is 19% lower than average levels recorded in 2020 – this is despite a 50 day market closure in England (and longer in Wales and Scotland) last year when little-to-no new stock was brought to market.
Three and four-bedroom houses have recorded the biggest annual drop in supply – reflective of buyer demand for more space and an overall trend in homeowner appetites to upsize. Listings of four-bedroom homes for sale are down year on year across the UK – by 58% in Scotland, 44% in the South West, 42% in the North West, and 40% in the South East. Across the UK, listings for three-bedroom and four-bedroom houses have reached a five-year low, with one of the busiest markets for a decade failing to replenish supply.
However, the tide is turning when it comes to the supply side of the market. Evidence suggests that listings started to rise in line with when schools reopened six weeks ago; for many families, bringing a property to market was easier once home-schooling came to an end. That said, all regions across the UK have witnessed at least a 20% fall in the availability of family homes for sale and there is a tangible risk that the lack of family houses for sale will limit growth of sales volumes in the second half of 2021, ultimately stifling current market impetus.
Buyer demand set to slow as lockdown eases
Buyer demand peaked in the week following Easter, at double the levels of the same period in 2017-19, and is currently up 27% in the year to date compared to the average levels in 2020 – despite the acceleration of demand recorded during the pandemic. However, since the first stage of lockdown easing on April 12th in England, buyer demand has fallen back slightly. This comes as households start to focus on catching up with friends and family, and taking advantage of leisure activities and amenities that haven’t been available since January. The third lockdown saw an increased lag time between homemovers looking for a new home and listing their current home, further dislocating the supply and demand imbalance.
Demand is underpinned by homeowners continuing to reassess how and where they want to live, as well as a rising number of first-time buyers coming back to the market – buoyed by the Government’s 95% mortgage guarantee scheme and the return of high LTV mortgages. While the return of first-time buyers is great news for the market overall, as a demographic, they absorb stock but don’t replenish it, which goes some way to explain why supply is failing to keep pace with demand.
Grainne Gilmore, Head of Research, Zoopla, comments: “The imbalance between supply and demand, which is creating a very tight market for family homes, will start to ease in the near term as homeowners become increasingly comfortable opening their homes to viewings, in turn building supply of new stock. The scale of buyer demand will also moderate from the peaks seen after Easter as lockdowns end across the country and there is some return to pre-pandemic ‘normality’. However, the fundamental imbalance will remain. Demand will remain strong as the ‘search for space’ among homeowners has further to run, especially as some office-based businesses are now confirming how their working practices will change in the longer-term. With appetite strong, homeowners thinking of selling should check My Home for a house price estimate and see if it’s time to sell. More flexible working arrangements open up new opportunities for homeowners to move to a further-flung location. At the same time, the roll-out of the 95% mortgage guarantee will mean more demand from first-time buyers, fuelling demand without replenishing supply.”