House prices are set to hold firm for the remainder of the year despite rising unemployment and the onset of recession in the UK, according to the latest Zoopla House Price Index.

The property expert suggested that government support for the economy and labour market, combined with support for mortgage holders, has reduced the number of forced sellers.

New data revealed that the post lockdown market rebound is continuing, with buyer demand since the start of 2020 now 34% higher than over the same period in 2019. This is above the 25% increase that Zoopla reported last month.

Zoopla also suggested that higher demand for homes has brought increased numbers of sellers and more homes coming to market. Driven by an imbalance between supply and demand, the average time to sell a property since lockdown restrictions were lifted is 31% lower than the same period 12 months prior.

Zoopla also revealed that the number of days to sell a property in the last 90 days has been 27 days, compared to 39 days over the same period in 2019. 

“Housing market conditions remain unseasonably strong despite the UK moving into recession,” Zoopla research and insight director, Richard Donnell, commented.

“The next important milestone for the housing market comes in September when schools reopen and the UK starts to get back towards a full reopening of the economy. The ‘once in a lifetime’ re-evaluation of housing requirements on the back of the lockdown will be a counterweight to the impact of the recession on housing market activity over the rest of 2020.

“While demand has softened over August, we expect the current momentum in market activity to continue into 2020 Q4.”

The index suggested that buyer appetite has been widely attributed to pent-up demand resulting from lockdown, but that it also reflects the impact of the UK as it “collectively reassesses what it wants from a home”.

Zoopla stated that quarantine has “galvanised” many homeowners and renters into reconsidering their housing requirements, resulting in demand for more space and changing work and commuting patterns.

“Demand continues to outpace supply and support house price growth of 2.5% per annum. Meanwhile, houses are selling faster than flats as we see a shift in buyer priorities in the wake of the lockdown and movers prioritise more space,” Donnell added.

“While the economy has contracted sharply and unemployment is rising, consumer spending has rebounded and purchasing manager indices are pointing to a wider rebound in the economy.

“This is positive but the unwinding of the furlough scheme and other government support is the next challenge that will test the strength of economic recovery. In the short-term we still believe that house prices will end the year 2% to 3% higher than at the start.”

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