Q1 2021 set to record ‘property uplift’ – Zoopla

The first quarter of 2021 is set to experience a “property uplift”, with 100,000 additional sales expected to complete before the end of March, according to new analysis by Zoopla.

The property expert’s latest House Price Index suggested that buyers are rushing to beat the stamp duty deadline, which will result in an increased transaction pipeline from the final months of 2020 spilling over into the new year.

Demand for housing has weakened since its summer peak and has now fallen below pre-lockdown levels, Zoopla stated. Despite the dip, demand still remains 34% higher than this time last year, and the index also showed that demand levels are set to hold firm for the remainder of the year, with the monthly sales completions estimate predicting the strongest December for over a decade.

The index suggested that “sustained” demand and more available supply has boosted the volume of new sales agreed, which are running 38% higher than a year ago, adding to the pipeline of business that is set to complete in the first quarter of 2021.

Zoopla director of research and insight, Richard Donnell, commented: “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. House price growth has hit a three-year high and is set to increase further in the short-term.

“The high volume of sales agreed this autumn will spill over as completed sales in 2021 and this will support the overall number of sales completed in 2021 at 1.1 million. It has been a remarkable turnaround and completed sales look set to fall just 6% short of last year despite a two-month closure of the market in England.”

Zoopla’s index also forecast that next year will be a year of “distinct phases”. Once the stamp duty holiday concludes at the end of March, Zoopla has anticipated a slowdown in sales completions, as the impetus to move amongst buyers motivated by stamp duty savings dissipates.

The property expert suggested this will have a knock-on effect on transaction volumes in the second quarter of the year – which Zoopla expects to run 20 to 30% below normal transaction levels as stamp duty is reintroduced – before recovering slightly and running 10% below 2019 levels for the second half of the year.

“There are some challenges ahead as the country battles the impacts of the pandemic on the economy and day-to-day life,” Donnell added. “The impact on the housing market is less than in previous downturns as sales volumes have already fallen in recent years and affordability levels are far from over-stretched.

“We expect housing demand to slow further over 2021 and this will ease the upward pressure on prices which we expect to be 1% higher by December 2021. Lower sales volumes over the second half of 2021 and a growing scarcity of supply will offset weaker demand and support headline pricing levels.”

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