According to the data, the Chancellor’s announcement of a stamp duty holiday extension and 95% mortgage guarantees created a 24% spike in buyer demand in England and Northern Ireland the days following the Budget, as more first-time buyers and movers entered the market.
Zoopla says that average buyer demand levels since the start of this year are running 13% higher than average levels across the whole of 2020.
The largest post-budget bounce in demand was for three-bed houses - this type of home is attracting the largest levels of demand across the country. However, there was a noticeable spike in demand for one and two-bedroom flats in London and the South East after the Chancellor’s announcements, signalling increased buying intent among first-time buyers and those looking to take advantage of the tapered stamp duty holiday.
While there was a slight post-budget rise in supply, overall supply levels remain deeply constrained, with total supply this year down 13% vs the 2020 average.
As lockdowns ease and vaccinations continue to be rolled out, Zoopla say that they expect more pent-up supply to come back to the market as vendors feel more comfortable opening their homes for viewing, albeit with the usual seasonal Easter dip.
Increasing activity levels among first-time buyers, especially as they take advantage of more 95% mortgages from April 1st, will keep pressure on the demand/supply imbalance, however, as these buyers have no properties to sell.
Annual UK house price inflation +4.1%
Zoopla says that house prices climbed by 0.5% in between December and February, taking the annual rate of growth to 4.1% - down from 4.4% the growth seen in January, but marks the fourth consecutive month price growth has been above 4%, matching levels last seen in summer 2017. Price growth ranges from 5.7% in Wales and 5.3% in the North West of England to London, trailing with 2.3% growth.
Meanwhile, Liverpool and Manchester continue to show the strongest levels of annual house price growth at a city level, at 6.6% and 6.4% respectively, while prices in Aberdeen are down 1.3% on the year.
Gráinne Gilmore, Head of Research, Zoopla, commented: “The search for space is driving continued demand for family homes, which means prices for houses are rising faster than flats, and houses are also selling more quickly.
“The prospects for the housing market over the next year have improved on the back of Budget. The continued search for space, the stamp duty extension and mortgage guarantees will support activity levels and headline house price growth up to the end of Q2 2021.
“Yet the pathway out of the lockdown, and the route to a full re-opening of the economy and unwinding of support measures, is unlikely to be simple or smooth.
“We still expect house price growth to moderate later in the year, but overall transactions are set to benefit from an additional boost following the stamp duty extension and tapering.”
Tahir Farooqui, CEO of private rental platform Canopy, said: “House buyer demand continues its upward surge. The newly announced tapered end to the stamp duty holiday has created a window of opportunity for hopeful buyers to benefit from slashed costs. Some will manage to seize it, while others will be left behind.
“However, it can’t be ignored that the tax holiday is causing artificial inflation of house prices across the UK, making homeownership further out of reach for many current renters. While 95% mortgages have been deemed part of the solution, the problem remains that hopeful buyers need to be considered creditworthy enough to secure a suitable mortgage in the first place.
“With the average renter plugging nearly £64k into the cycle of renting before they can finally save up to buy their first home, it is essential these monthly payments are taken into account for their credit score. Behaviours such as rent tracking should become the norm, aiding Generation Rent from the get-go, rather than continuing to put hurdles in their way.”
