140,000 more home buyers rushing to beat stamp duty deadline; sales pipeline up 50% on last year as housing market becomes more polarised
28th October 2020
Record high sales agreed post-lockdown has led to 50% more homes progressing through the system than this time last year; Zoopla estimates a total of 418,000 sales worth £112bn
Upswell in activity driven by acute levels of demand after the market reopened; sales agreed are up 40-60% between July-October compared to 2019
Strength of demand means prices have risen to a two and a half year high of 3% over the last 12 months compared to +1.1% this time last year
Transactions are taking just over 100 days from sales agreed to completion, but the volume of business means this could increase in the short term. Not all sales agreed in November and December complete by 31 March in a normal year
Those hoping to enter the market in January to beat the stamp duty deadline should be aware that just half of sales agreed are likely to complete in time
The number of homes for sale is up 18% on last year, at higher average asking prices; the median price of a home on Zoopla is 10% higher than in 2019
Regional sales agreed are running at their highest in the South East, London and East
Impact of recession and rising unemployment is masked by current strength of market activity; polarisation set to kick in by mid-2021 as sales in less wealthy demographics decline and sales in wealthier demographics increase
Wednesday 28th October 2020, London: A total of 418,000 properties worth £112 billion are currently progressing through the sales pipeline, amounting to a 50% uptick in volume compared to the same period in 2019*. These are the latest findings in the monthly House Price Index by Zoopla, the UK’s leading property portal.
Sales pipeline swells
The post-lockdown market resurgence has led to record high sales agreed, with an additional 140,000 transactions in the purchasing pipeline compared to this time last year.
This upsurge in activity follows a significant boost in demand after the extended market closure. Between July and October, sales agreed increased between 40% and 60% compared to the same period in 2019.
Zoopla data also shows that new sales agreed were up 9% year on year in June, growing to 42% in July, and peaking at 62% in August [see figure 1]. These sales are now in the transaction pipeline, motioning towards completions.
Figure 1: New sales agreed versus the same month in 2019
Source: Zoopla Research
A race to completion
With a proportion of buyers entering the market to take advantage of the temporary stamp duty relief, there is an increased pressure to act sooner rather than later in order to complete a purchase before the end of March deadline.
At present, it is taking just over 100 days from sales agreed to completion; however, the volume of business means this could increase in the short term. For those keen to beat the stamp duty deadline in March, a sale should ideally be agreed before Christmas - and the property search should begin well in advance.
Zoopla data shows that most new sales agreed in the final quarter of a normal year will complete by 31 March the following year. However, 54% of sales agreed in January will complete by the end of the first quarter, falling to less than a fifth in February. For prospective buyers hoping to enter the market in early 2021 with the intention of beating the stamp duty deadline, it is likely that just a quarter of sales will complete in time [see figure 2].
Those buyers who leave it late, for example to January, will need to be well prepared and if they have a house to sell, they should find an agent well before Christmas and instruct a conveyancer to get as much paperwork together as possible to boost the chances of a completed sale.
Figure 2: The percentage of agreed sales that will complete by 31st March 2021
Source: Zoopla Research
City level strength
UK house price growth is running at a two and a half year high at 3%. Northern cities are leading annual house price growth, with the highest growth rates in Nottingham (+5.1%), Manchester (+4.6%) and Leeds (4.5%); this growth is expected to continue for the next two to three months and could peak at +4% by the year end, buoyed by ongoing demand.
Regional sales agreed are running at their highest in the South East, London and South East where the market is recovering off a low base - last year sales volumes in southern regions were 20% lower than in 2015, which is why the rebound in demand has boosted sales so much in southern England [see figure 3]. In contrast, sales volumes have held up better in northern regions making less room for growth.
18% more homes for sale
More demand brings more supply to the market as most buyers are also sellers. London has seen the greatest increase in new supply - up 39% compared to this time last year, while the North East and North West have seen slower growth in supply [see figure 3]. This is explained in part by the rebound in demand led by the capital bringing with it an uptick in stock, as many buyers need to sell an existing property in order to fund their next move.
At a national level, inventory is up 18% compared to a year ago and, while more supply brings greater choice for buyers, it will also act to keep house price growth in check. Much of this supply is also at higher average sales prices than a year ago creating something of a risk to future sales volumes should demand weaken materially in the first half of 2021.
Figure 3: Sales agreed higher than last year as supply expands
Source: Zoopla Research
A polarised market
Despite its underlying strength, the flow of new buyers into the housing market is slowing as is typical at this time of year. Demand for homes is still 40% higher than it was in 2019, but it has slowed back to pre-COVID levels of early March. That said, house price growth is expected to increase further towards +4% over the next two to three months.
While national measures of housing market activity point to strong market conditions, the picture is far from uniform across the country. The housing market is not immune to economic pressures resulting from COVID. The recession and rising unemployment are impacting parts of the housing market, but this is being masked by strong market conditions in other areas.
An analysis of where new sales have been agreed over the last two months by the demographic profile of households in the local market (using CACI’s ACORN profiling system) shows a clear shift in activity. Growing economic uncertainty and reduced credit availability mean a relative decline in the share of new sales being recorded in less wealthy demographics where households are more sensitive to changes in the economic outlook and the availability, pricing and terms for credit. In contrast, we have seen an increase in new sales in areas with wealthier demographics where home-owners are less directly impacted by the recession so far.
This polarisation is set to become more apparent by mid-2021, after the post lockdown rush has worked its way through the system. Greater supply of housing for sale will also make the market more sensitive to changes in demand over the first half of 2021.
Commenting on the latest UK House Price Index, Richard Donnell, Research and Insight Director, Zoopla, said:
“Levels of housing market activity are slowly becoming less frantic as we approach the year end. There is a sizable pipeline of business for the property, lending and conveyancing industry to convert into completed sales before Christmas and into Q1 2021. The stamp duty deadline will focus the minds of committed movers in the near term, which will support sales volumes and make for a strong first quarter of sales completions in 2021.
“Those who leave it to January to start their search for a home will be cutting it fine - just half of sales agreed in January will convert into a completed sale by the end of March so those looking to beat the stamp duty deadline will need to be well prepared. Finding an agent before Christmas and instructing a conveyancer to prepare all the sellers legal information will be essential to boosting the chances of saving up to £15,000.
“House price growth continues to move higher as the weight of demand pushes the growth rate upwards and we expect prices to be 4% higher by the end of 2020. However, the strength of the market nationally is masking weakness in parts of the market where sales are slowing in areas where households are typically on lower incomes and more sensitive to economic uncertainty and more restricted credit availability. This market polarisation is set to become a growing feature of the market as we move in 2021.”
- Ends -
For further information, please contact PR Team on [email protected] or +44 (0)20 3873 8770.
Hello. We're Zoopla. A property website and app.
We know you're not just looking for a place to live. You're looking for a home.
Yeah, we've got over a million properties for you to browse.
Tools that let you filter them in all kinds of clever ways.
And reliable house price estimates, so you can be sure you aren't paying over the odds.
But we know you're looking for more than that.
Because that first flat won't just be a 'great investment opportunity'.
It'll be the feeling of starting out on your own.
That extra bedroom won't just mean another £20K on the re-sale price, it'll mean having your sister over to stay.
And that bungalow won't just be a way to release some equity, it will be a chance to spend more time with the grandkids.
We know that searching for a home is about more than just checking its price, location and features (important as all those things are).
What really matters is how it makes you feel.
We know what a home is really worth.
So let us help you find yours.
Zoopla is part of Zoopla Limited which was founded in 2007.
Zoopla Limited, The Cooperage, 5 Copper Row, London, SE1 2LH
Registered in England and Wales with Company No. 06074771
VAT Registration number: 191 2231 33
Data Protection number: Z9972266