According to
the latest Zoopla House Price Index, housing market activity is at its
strongest since 2015. This has been driven by pent-up demand and a
once-in-a-lifetime re-evaluation of what buyers want from a home in the wake of
lockdown. The stamp duty relief, which I suggested at the time probably wasn’t
strictly needed, also appears to have added fuel on the fire.
The number of
new sales agreed in August on Zoopla is 76% higher than the five-year average. Typically,
August is seen as a quiet month for the market as people fly abroad whilst the
kids are on Summer holiday. With the majority of those plans in tatters, it
seems the typical housing market schedule has shifted too.
Considering
the long period of lockdown and ongoing restrictions, not many would have bet
on a 34% increase in buyer appetite since the start of 2020 compared to January-August
of last year. Fortunately for current prospective buyers, more homes have been
coming to the market too, with supply in the previous month up 50% compared to
last year.
The bounce in
activity is also leading to properties selling quicker than before the pandemic
across all regions of the UK. Homes sold since 13th May took just 27
days to do so, compared to 39 days in the same timeframe last year.
The larger
houses aren’t sticking around either; with four and five-bedroom houses selling
33% faster than they were a year ago. They used to be the slowest types of
properties to sell and yet they are both now selling quicker than flats are.
This appears to have been boosted by workers moving from more expensive urban
areas in favour of locations further away from work for lifestyle choices, now
that many are looking to work from home on an ongoing basis.
Due to a
large number of more expensive homes being listed, the average asking price has
risen 8% compared to a year ago. House prices haven’t increased though (the
annual rate of UK house price growth slowed to 2.5% in July, from 2.7% in June),
but the proportion of more expensive homes for sale has. The stamp duty relief
is thought to be a key reason for the surge of activity in London and the
South-East, as the savings on offer in these areas are greater than average.
It will be
interesting to see whether this increased level of activity runs out of steam as
schools re-open and the full ramifications of the pandemic’s economic impact
becomes clearer. Now in recession, the economy has already contracted sharply
and unemployment is rising, although some are hopeful that a strong rebound in
consumer spending will soon spread to the wider economy. I suspect
October-December will be crunch time, as the furlough schemes end and
businesses need to make difficult decisions that will test the strength of any
economic recovery and, as a result, how the housing market will fare.
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