Buyer demand soars by 40% in 2020
As the rollercoaster year draws to a close, the total value of homes changing hands in 2020 is 26% higher than in 2019, according to our House Price Index.
The total value of homes changing hands is set to jump by £62bn in 2020 as buyer demand soars by 40%.
Sales have been agreed on more than £300bn worth of property this year, that's 26% higher than in 2019, as successive lockdowns have caused people to re-evaluate their housing needs.
The high levels of buyer demand, combined with a shortage of homes for sale, has pushed annual house price growth up to a three-year high of 3.9%.
The jump leaves the average home costing £222,900, according to our latest House Price Index.
What’s happening to house prices?
UK house price growth has increased to 3.9%, its highest level since August 2017, and up from 1.3% a year ago.
The impetus for the growth is coming from northern England and Wales, where property remains more affordable.
On a city level, Manchester led the way, with property values rising by 5.7% during the past year, closely followed by Leeds at 5.6%, Nottingham at 5.4% and Liverpool at 5.3%.
All cities monitored by our House Price Index recorded annual gains apart from Aberdeen, where prices dropped by 2.6%.
Regionally, the north west recorded the strongest growth, with average house prices increasing by 5% year-on-year, followed by Wales and Yorkshire and the Humber, both at 4.9%.
Is buyer demand still strong?
The housing market looks set to end the year on a strong note, with buyer demand currently 33% higher than it was in December 2019, as the market defies the traditional seasonal slowdown.
The pandemic has driven a ‘seismic’ search for space and quality location. And demand for family housing with gardens, parking and extra space to work from has continued to rise.
Despite the shutdown of the housing market earlier this year, the ‘once-in-a-lifetime’ reassessment of property has seen buyer numbers soar by 40% across the whole of 2020, compared with the previous year.
What’s happening with property sales?
The strong levels of demand are proving to be committed, rather than speculative, and are converting readily into sales agreed.
Sales levels have jumped by 9% during 2020, compared with 2019, although with transactions taking three to four months to complete, a portion of these will spill over into 2021.
The rebound in sales has been strongest in the south east and eastern England, where they are more than 20% higher than in 2019.
But the strong demand has not been matched by an equal rise in new listings, with the number of properties for sale increasing by only 4%, creating a mismatch between supply and demand and putting upward pressure on prices.
What’s next for the housing market?
Housing market activity remains well above normal levels for this time of year, and this momentum is expected to lead to a strong start in 2021.
Looking ahead, our research and insight team expects annual house price growth to reach 5% in February, before slowing to 1% by the end of 2021, as demand starts to weaken during the second half of the year.
Buoyed by the strong start to the year, the number of completed property transactions is likely to be broadly similar to this year at 1.1 million.
Richard Donnell, director of research and insight at Zoopla, said: “The ‘once-in-a-lifetime re-assessment of housing’ kickstarted by the pandemic has further to run in our view and this will support demand into 2021.
“With a long Christmas weekend, and many households isolating in smaller groups, we expect interest in housing to be stronger than usual ahead of the traditional Boxing Day bounce, when interest in housing jumps.”
But Donnell warned that while market activity is being boosted by latent demand unlocked by the pandemic, the housing market is not immune to economic forces and rising unemployment.
He added: “Economic pressures are already impacting in parts of the market, reducing the volume and share of sales in less wealthy areas, for example.”
Four tier Covid-19 restrictions: what does it mean if I want to move home?
We give you a list of regions in full and explain what impact the government's tiered system could have if you’re looking for a new property.
England is now under four tiers of coronavirus restrictions, with London and parts of the south east having been placed in the highest tier by Prime Minister Boris Johnson.
The good news is that under the government’s new advice, the housing market remains open for business, whether you’re buying, selling, renting or letting.
Housing secretary Robert Jenrick has confirmed via Twitter that renters and homeowners in England will be able to move and removal firms, tradespeople, and estate agents can still operate in all tiers, including tier four.
“Housing market update: the sales and rental markets remain open in all tiers. All associated activities can continue as before," writes Jenrick.
“Please follow the Covid secure guidance. And use your judgment as to whether it’s necessary right now.”
Across the board, estate agents remain open and physical property viewings are allowed, with comprehensive advice on how to follow social distancing guidelines inside homes.
Others in the housing market, such as conveyancers, tradespeople, and professional movers, can continue to operate, too.
What the different tiers mean and which regions are in them:
ier 1 - medium alert
In tier one areas, all businesses and venues can continue to operate in a Covid-secure way, other than those that are currently closed by law, such as nightclubs.
Schools, universities and places of worship can remain open, and indoor sport and exercise classes can continue to take place. People must not meet in groups of more than six either indoors or outdoors, other than where a legal exemption applies, such as for a wedding or funeral
Find full details and the latest government guidance here.
What does tier 1 mean for the property market?
Tier one essentially means business as usual for the property market, but with as many safety restrictions in place as possible.
Can I view properties in a tier 1 area?
Yes.
Property viewings can continue to happen with Covid-secure measures in place.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and estate agents may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed at this time.
If any member of either the household whose home is being viewed, or of the household viewing the property, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
The government is encouraging the use of virtual viewings before visiting properties in person in order to minimise public health risks.
Are estate agents in tier 1 open?
Yes.
However, the toughened tier system means more people are being encouraged to work from home where possible under tier one.
This might mean some agents may choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 1?
Yes.
Estate and lettings agents, removers, valuers and people in sales and lettings offices and show homes can continue to work under the tiered system as they did during the most recent national lockdown.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves if, for example, one of those involved becomes ill with Covid-19 or has to self-isolate.
Which English regions are in tier 1?
South east
- Isle of Wight
South west
- Cornwall
- Isles of Scilly
Midlands
- Herefordshire (from midnight on Saturday 19 December)
Tier 2 - high alert
Tier two is for areas with a higher or rapidly rising level of Covid-19 infections.
Anyone living in a tier two area must follow all of the tier one rules, and also not meet with anybody outside of their household or support bubble in any indoor setting, including their home or a public building.
Meetings of up to six people from outside the same household or bubble can take place outside in public spaces and gardens.
Find full details and the latest government guidance here.
What does tier 2 mean for the property market?
Under tier two, the majority of businesses can continue to operate as usual and this includes estate agents and other services related to moving house, such as conveyancers and removers.
Can I view properties in a tier 2 area?
Yes.
In-person property viewings can still take place, with appropriate precautions.
The same advice applies to tier two property viewings as it does in tier one.
This means property viewings can continue to take place with Covid-secure measures in place.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed at this time.
The government is encouraging the use of virtual viewings before visiting properties in person to minimise public health risks, and socially distant viewings.
If any member of either the household whose home is being viewed, or of the household viewing, shows symptoms of Covid-19 or is self-isolating, then in-person viewing should be delayed.
For the latest government advice in full check here.
Are estate agents in tier 2 open?
Yes.
However, as with tier one, the toughened tier system means more people are being encouraged to work from home where possible.
This might mean some agents choose to work from home, continuing to work digitally and opening their branch by appointment only.
Can I move house under tier 2?
Yes.
The government has been clear that the property market is staying open even as restrictions are toughened, and during the second national lockdown moving services continued with Covid-secure measures in place.
This means estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves, for example if one of those involved becomes ill with Covid-19 or has to self-isolate.
Which English regions are in tier 2?
East of England
- Milton Keynes
- Cambridgeshire (excluding Peterborough, which is in tier four)
- The following local authorities in Essex: Colchester, Tendring, Uttlesford
- Norfolk
- Suffolk
East midlands
- Northamptonshire
- Rutland
North west
- Cumbria
- Liverpool City Region
- Warrington and Cheshire
South east
- Bracknell Forest
- Brighton and Hove
- East Sussex
- Hampshire (excluding Portsmouth, Gosport and Havant which is in tier four)
- Oxfordshire
- Reading
- Waverley in Surrey
- West Sussex
- Windsor and Maidenhead
- Wokingham
South west
- Bath and north east Somerset
- Bournemouth, Christchurch and Poole
- Bristol
- Devon, including Plymouth and Torbay
- Dorset
- Gloucestershire (Cheltenham, Cotswold, Forest of Dean, Gloucester, Stroud and Tewkesbury)
- Somerset (north Somerset, south Somerset, Somerset west and Taunton, Mendip and Sedgemoor)
- Wiltshire and Swindon
West midlands
- Shropshire and Telford & Wrekin
- Worcestershire
Yorkshire
- City of York
- North Yorkshire
Tier 3 - very high alert
Tier three is reserved for areas in England where transmission rates of Covid-19 are high.
People living in these areas are not allowed to meet anybody outside of their household or support bubble in an indoor or outdoor setting, apart from open public spaces such as parks and beaches, where the rule of six will still apply.
The public are also advised not to travel in and out of these areas, other than for work, education, accessing youth services or caring responsibilities.
What does tier 3 mean for the property market?
The government has been clear that the property market is staying open even as restrictions are toughened, and during the latest national lockdown moving services continued but with Covid-secure measures in place.
However, the government has called for flexibility among movers and sellers under these measures, should plans have to change due to any of the households involved contracting or being exposed to Covid-19.
Can I view properties in a tier 3 area?
Yes.
In-person viewings are still allowed under tier three. However, some estate agents, sellers and buyers may decide to postpone viewings while restrictions are in place.
That said, renewed lockdown measures may also heighten people’s desire to move if they are unhappy with their current accommodation.
Virtual viewings can continue to take place and are likely to be offered by estate agents in the first instance so that any in-person viewings are given to the most interested prospective buyers.
As in the lower tiers, Covid-secure measures should be firmly in place during in-person viewings.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time. Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed under tier three or any of the lower tiers.
You can find out more about what to expect from socially distant viewings in this article.
If any member of either the household whose home is being viewed, or the household viewing, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
Are estate agents in tier 3 open?
Yes.
However, as with tiers one and two, the toughened tier system means people are being encouraged to work from home when possible.
This might mean some agents choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 3?
Yes.
Estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Which English regions are in tier 3?
East Midlands
- Derby and Derbyshire
- Leicester and Leicestershire
- Lincolnshire
- Nottingham and Nottinghamshire
North east
- North East Combined Authority: County Durham, Gateshead, South Tyneside, Sunderland
- North of Tyne Combined Authority: Newcastle upon Tyne, North Tyneside, Northumberland
- Tees Valley Combined Authority: Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, Stockton-on-Tees
North west
- Blackburn with Darwen
- Blackpool
- Greater Manchester
- Lancashire
South west
- South Gloucestershire
West midlands
- Birmingham, Dudley, Sandwell, Walsall and Wolverhampton
- Staffordshire and Stoke-on-Trent
- Warwickshire, Coventry and Solihull
Yorkshire and The Humber
- East Riding of Yorkshire
- Kingston upon Hull/Hull
- North East Lincolnshire
- North Lincolnshire
- South Yorkshire
- West Yorkshire
Tier 4 - stay at home
Tier four replaces tier three as the very highest level of English restrictions and is reserved for areas in England where transmission rates of Covid-19 are rising rapidly.
People living in these areas are not allowed to meet anybody outside of their household or support bubble in an indoor or outdoor setting, apart from open public spaces such as parks and beaches, where one individual may meet one person from outside their bubble.
Tier four residents have been advised to stay at home and cannot leave or be outside of the place they are living unless they have a reasonable excuse.
The public are also advised not to travel in and out of these areas, other than for work, education, accessing youth services or caring responsibilities.
What does tier 4 mean for the property market?
The government has been clear that the property market is staying open even as restrictions are toughened, and during the latest national lockdown moving services continued but with Covid-secure measures in place.
Leaving your home to undertake activities associated with finding and securing a new home, or moving home, are considered exemptions to the advice to stay at home.
However, people outside your household or support bubble should not help with moving house unless absolutely necessary.
The government has called for flexibility among movers and sellers under these measures, should plans have to change due to any of the households involved contracting or being exposed to Covid-19.
Can I view properties in a tier 4 area?
Yes.
In-person viewings are still allowed under tier four. However, some estate agents, sellers and buyers may decide to postpone viewings while restrictions are in place.
That said, renewed lockdown measures may also heighten people’s desire to move if they are unhappy with their current accommodation.
Virtual viewings can continue to take place and are likely to be offered by estate agents in the first instance so that any in-person viewings are given to the most interested prospective buyers.
As in the lower tiers, Covid-secure measures should be firmly in place during in-person viewings.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed under tier four or any of the lower tiers.
You can find out more about what to expect from socially distant viewings in this article.
If any member of either the household whose home is being viewed, or the household viewing, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
Are estate agents in tier 4 open?
Yes.
However, as with tiers one, two and three, the toughened tier system means people are being encouraged to work from home when possible.
This might mean some agents choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 4?
Yes.
Estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
The government advice is to follow the national guidance on moving home safely, which includes advice on social distancing and wearing a face covering.
Which English regions are in tier 4?
London
- All 32 London boroughs plus City of London
South East
- Kent and Medway
- Buckinghamshire
- Berkshire (Bracknell Forest, Reading, Slough, Wokingham, Windsor and Maidenhead and West Berkshire)
- Surrey (excluding Waverley)
- Hastings and Rother
- Havant, Gosport and Portsmouth
East of England
- Hertfordshire
- Essex (excluding Tendring, Uttlesford and Colchester)
- Central Bedfordshire, Bedford, Milton Keynes, Luton
- Peterborough.
What about Scotland?
Scotland’s government has imposed a five-level system of coronavirus measures.
Currently, there are 11 areas in west and central Scotland now in the highest level of Covid-19 restrictions, which go from zero (lowest) to four (very high risk).
Can I view properties in-person in Scotland?
Yes.
The Scottish government’s guidance on property viewings emphasises a virtual-first approach.
This means in-person property viewings are permitted, but it is recommended that you view properties virtually in the first instance if possible and only proceed to a physical viewing if you are interested in offering on the property.
Can I move house in Scotland?
Yes.
In Scotland, people can continue to move under all five levels, and to and from areas in different levels.
However, the government suggests people may wish to consider whether they can postpone a move and related activities in areas subject to level four.
You can read the latest guidance from the Scottish government on moving home here.
What about Wales?
Wales recently imposed a four-layer tier system of Covid-19 restrictions.
The country is currently at level three. Here are the explanations of the four tiers:
- Level one (low risk): Level of restrictions closest to normality while infection rates are low and other preventative measures, such as social distancing and working from home, remain in place.
- Alert level two (medium risk): Additional controls to limit the spread of coronavirus, complemented by more targeted local actions to manage specific incidents or outbreaks.
- Alert level three (high risk): The strictest restrictions short of a firebreak or lockdown.
- Alert level four (very high risk): Equivalent of full lockdown.
People living in Wales may:
- move home
- market a residential property for sale or rent and prepare a residential property for persons to move into
- visit estate or letting agents, developer sales offices or show homes for the purposes of the purchase, sale, letting or rental of residential property
- view a residential property.
Looking for a new home?
It’s worth remembering that Zoopla, like other property portals, is open 24/7. That means you can do a lot of your property search online, from exploring our news, guides and insights, and checking out the prices of recently sold properties, to registering to get instant alerts for exactly your type of property - and save as many searches as you want.
Richard Donnell, our head of research and insight, said: “We’ve already seen how the first lockdown led to people carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles, with a focus on prioritising space. And the latest restrictions will continue to support this trend – particularly for those who are more financially secure.”
Meanwhile, the stamp duty holiday is continuing to act as an incentive for buyers to complete a purchase before the tax break ends on 31 March 2021.
However, with different regions in different tiers, it’s a good idea to find out how your local housing market is operating in a Covid-19-secure way.
Bank of England to review mortgage affordability as Covid-19 creates 'tight conditions’ for borrowers
The review by the Financial Policy Committee comes amid concerns that first-time buyers are struggling to get mortgages.
The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder.
Its Financial Policy Committee (FPC) is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate.
The rules, which limit the amount people can borrow relative to their income and ensure homeowners could still afford repayments if interest rates jumped by 3%, are thought to have impacted first-time buyers particularly hard.
The review comes as the number of mortgages available to people with only small deposits has nosedived, with lenders responding by becoming more risk averse in the face of the Covid-19 pandemic.
“Mortgage credit conditions remain tighter than at the start of the year, particularly for high loan to value mortgages,” according to FPC meeting notes in December 2020.
“This reflects reduced risk appetite from lenders due to the economic outlook, as well as operational constraints in meeting the current high demand for mortgages.”
The FPC is due to report its findings next year.
Why is this happening?
Since June 2014, the FPC has recommended that no more than 15% of mortgages advanced by individual lenders are awarded to people borrowing 4.5 times their income.
It also suggested lenders ensure borrowers could still afford their mortgage repayments when their deal ended. At this point, a lender is moved onto a reversion rate of repayment, which is typically 4.5% or higher if interest rates have risen by 3%.
The move was intended to protect the banking system from a high level of household debt following the financial crisis of 2008. However, the reforms were introduced at a time when interest rates were expected to rise by 2.25% during the coming five years.
The Bank of England base rate currently stands at a record low of 0.1%. Interest rates are now expected to stay low for a longer period of time, making it easier for borrowers to service their debts and meaning the current affordability rules may no longer be appropriate.
Who does it affect?
The review of lending rules is good news for first-time buyers who are more likely to struggle to meet the affordability tests than those who have high levels of equity in their home.
Although the FPC said there was no evidence that the current rules had limited mortgage availability, it pointed out that credit conditions had tightened recently, particularly for people with only small deposits, while rates on these mortgages were also higher.
There are currently only eight mortgages available for people with a 5% deposit, compared with 391 in March this year, while the number of different deals for people with 10% deposits has dropped to 88 from 779 during the same period, according to Moneyfacts.
At the same time, the average two-year fixed rate paid by people borrowing 90% of their home’s value has increased by 1.17% during the past year.
What’s the background?
The review comes after Prime Minister Boris Johnson promised to help first-time buyers by increasing the availability of mortgages for people with small deposits.
In his speech at this year’s virtual Conservative Party conference, Johnson announced plans for a new scheme for people with 5% deposits, in a bid to turn “generation rent into generation buy”, although further details were not given.
Meanwhile, the government’s flagship Help to Buy equity loans scheme will be available to first-time buyers from April next year, but applications open on 16 December.
The scheme enables people to purchase a new-build property with a 5% deposit which the government tops up with a five-year interest-free loan.
Top three takeaways
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The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder
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It is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate
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The review comes as the number of mortgages available to people with only small deposits has dived as lenders become more risk-averse in the face of the Covid-19 pandemic.