Tuesday 28 September 2021
Zoopla released their UK House Price Index today & the 3 key takeaways this month are:
1. No sign of a cliff-edge in demand after the ending of the tapered stamp duty holiday in England & NI
2. Demand remains higher than typical for this time of year, amid lower levels of supply
3. Imbalance between demand and supply continuing to put upward pressure on pricing, although this will start to unwind later in year
Demand from buyers searching for space, and making lifestyle changes after consecutive lockdowns, has further to run. Balancing this however, will be the more challenging economic environment as we move into Q4.
The average house price rose by +1.2% in the three months to the end of August, taking the annual rate of price growth to +6.1%, up from 2.8% in August 2020.
Looking at the UK 20 city index above, the price growth in Liverpool continues to be the highest with average prices up +9.8% in the 12 months to September, with Manchester also showing high levels of growth at +8.1%.
As examined in previous reports, in the face of the very strong buyer demand evident since May last year, average home values have risen by a greater margin in regions and towns where relative affordability is greater. Liverpool is +3.7% higher than the UK average annual growth & Manchester +2%!
In terms of stamp duty, data shows the looming deadline had little impact on demand and buyer demand is still some 35% higher than average levels recorded since 2017. This indicates that the smaller stamp duty savings on offer have not been the primary driver of demand in the market.
Any expectation of a slowdown in the market as the stamp duty holiday ends is further quashed when examining how quickly homes are selling. Since May this year, the average time taken for a sale to be agreed on a property from when it was listed has been below 30 days. However, this measure of the speed of the market may start to edge up in the coming months as a lack of stock starts to have more of a ‘self-limiting’ impact on the market.
The diagram below shows the stark contrast between supply & demand:
It’s still likely however that properties will sell more quickly than historical norms through Q4. Zoopla expect the market to remain busy compared to historical norms, and for price growth to remain in firmly positive territory at the end of the year, although lower than current levels of +6.1%. Stock levels will start to rebuild in early 2022 as market activity returns to more normal levels.
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Read the full Zoopla report here : https://www.hometrack.com/uk/insight/uk-house-price-index/august-2021-house-price-index/