Britain’s property boom could see more than 100,000 additional house sales in the first three months of 2021 according to a new report.
Property website Zoopla says the number of new sales being agreed is 38% higher than the same period in 2019 and predicts the market before Christmas will be busiest it has been for over a decade.
Two main factors
The surge in buying has been brought on by two main factors – pent-up demand following the first UK lockdown and a desire to take advantage of the stamp duty holiday which ends on March 31st next year.
The boom has been biggest in London and the South East with sales 7% up on the previous year.
The surge in interest has had the effect of pushing up house prices by 3.5% – the highest level of growth for three years – and experts expect them to continue to rise at least until the new year.
Zoopla’s Richard Donnell said the housing market has had ‘a remarkable turnaround’ since the Spring of this year, adding: “It has been a rollercoaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30% higher than this time last year.”
There were more than 105,000 residential transactions in October, a rise of 10% on September’s figure and 8.1% higher than the same period last year according to figures from HMRC.
Property developer Andrew Southern said: “There haven’t been more transactions than this in a single month since March 2016, and even that was a very unusual spike created by tax changes for landlords.
Record house prices
“The pandemic and a raft of measures to support the economy have delivered record house prices and, finally, a head-turning recovery in sales volumes.”
A final surge in deals is expected in January as buyers make a last ditch attempt to beat the stamp duty deadline, but Zoopla claim only half of those are likely to complete in time.
New mortgage approvals
In a separate report the Bank Of England said new mortgage approvals rose again in October to £20.6 billion, following the big spike of £19.5 billion in September. It is the highest number of approvals since 2007 and is 33% higher than the pre-Covid figure for February this year.
Andrew Montlake of Coreco commented: “For mortgage approvals to be the highest since September 2007, the month when people queued outside Northern Rock and the global financial crisis symbolically began, shows the sheer extent of the pent-up demand caused by the first national lockdown.
“This data is bittersweet, of course, as we all know that 2021 could see the real economic impact of the pandemic start to bite. It’s hard to celebrate such robust mortgage approvals data when we all know what’s round the corner.
“Unsurprisingly, lenders are circling the wagons due to concerns over rising unemployment levels and their impact on house price growth. Getting a mortgage at higher loan to values remains an almost insurmountable challenge.
“What’s vital is that lenders don’t become overly cautious and stop lending to borrowers with larger deposits. With a vaccine looming, lenders will hopefully avoid entering panic mode.
“There are still many landlords and owner-occupiers with equity and decent incomes, who are perfectly viable borrowers, and the banks shouldn’t forget this.