After the recent changes to the stamp duty holiday, what’s the outlook for buyer demand? We reveal four reasons why this isn’t the end of the property market high.
Our data has confirmed that buyer demand started to moderate in the months prior to the initial stamp duty changes on 30th June.
So does this mean it’s the end of the UK property boom?
We reveal four reasons why the property market won’t run out of steam in 2021.
Demand may have moderated slightly from the highs of April. However, it’s clear from our latest House Price Index Report that the market remains busy.
In fact, when we compare current levels to before the pandemic, buyer demand continues to run 55% above that recorded in 2019. Meanwhile, house price growth in many regions is at a ten-year high.
And although the prospect of larger stamp duty savings was off the table for many homemovers as we edged towards 30th June, sales continued to move at pace throughout May. The market is currently moving at its fastest in at least five years.
This underpins our forecast that 2021 will be one of the busiest years for the housing market since the global financial crisis. We anticipate 1.5 million residential transactions will take place this year.
This is great news for agents and we’re working closely with our customers to ensure they’re well equipped to take advantage of such a buoyant market.
As COVID-19 restrictions continue to ease, many companies have given office-based workers guidance on how they’ll operate when fully reopen.
And with many businesses now more open to flexible working, some workers will have the certainty they need to move for additional space, or to a different location. Previously ‘uncommutable’ areas have opened up – further out from major cities but perfect for a weekly office visit.
As a result, we believe the ‘search for space’ will continue to fuel buyer demand. Homeowners who’ve outgrown their homes during the past year are still reconsidering where they want to live.
It’s because of this that we’re confident that this once-in-a-lifetime ‘reassessment of home’ will continue to support sales activity through the second half of 2021.
It’s clear from the data that an increasing number of first-time buyers, who thought owning their own home was out of their grasp, have been able to enter the market.
This is largely due to the fact many have been able to use the past year to save for a deposit. Also, the growing number of mortgages on offer to them – such as the new 5% deposit mortgage scheme – have helped.
We expect demand from first-time buyers to continue, as those eligible will still be able to benefit from stamp duty savings on the first £300,000 of their home purchase (on homes worth up to £500,000). That’s regardless of any changes to stamp duty beyond June or September.
It’s also important to remember that even though the stamp duty threshold has dropped from £500,000 to £250,000, we’re still seeing a lot of activity in more affordable markets.
This is particularly strong from buyers who are pushing to complete ahead of the final September deadline, in order to take advantage of savings of up to £2,500.
Although the total stock of homes for sale continues to run well below previous years, recent data shows that 42% of homeowners are considering putting their home on the market*.
That’s why we’re building on our My Home experience. This new-and-improved tool brings would-be sellers to Zoopla to find out if its time to sell. That means more leads for our agent partners.
We’re also working hard behind the scenes to counter any fall in supply by nudging inactive homeowners into selling.
It’s all part of our plan to build up a future base of sellers to ensure our agent partners are set up for success, wherever the market goes next.
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*Source: Zoopla internal data from the first three weeks of the ‘My Home’ campaign, compared to two weeks prior to the start of the campaign