Housing market on course for busiest year since global financial crisis
The stamp duty holiday and the pandemic-led 'search for space' are set to lead to the highest level of homes changing hands for 14 years.
The housing market is on course for its busiest year since the global financial crisis as the scramble for properties continues.
More than 1.5 million homes are expected to change hands this year, a staggering 45% more than in 2020, according to our latest House Price Index.
With the number of housing sales each year rarely exceeding 1.2 million over the last decade, this would mark the highest level of housing market activity since 2007.
As well as breaking a recent record, 2021 looks set to be one of the top 10 busiest years since 1959.
Meanwhile, the total value of homes sold in 2021 is expected to reach £461bn – up 46% or £145bn compared with 2020, and 68% compared with 2019.
While this is largely being driven by the sheer volume of homes changing hands, it is also due to more expensive properties selling amid the pandemic-led 'search for space'.
What’s happening to house prices?
House price growth has almost doubled during the past year to stand at 4.1% in April, up from 2.3% in the same month of 2020, as demand from potential buyers continues to outstrip the supply of homes on the market.
House price growth is strongest in areas where affordability is greatest. Wales leads the way at a regional level, with house prices up 6.3% year-on-year, followed by Yorkshire and the Humber at 5.4% and the north west at 5.3% respectively.
At a major city level, Liverpool and Manchester have seen the highest levels of house price growth for the fifth month in a row at 6.9% and 6.8% respectively – twice the level recorded in the more normal markets seen between 2017 and 2019.
However, price growth is slower in southern regions where affordability is more stretched.
London recorded the slowest regional rate of house price growth for the sixth month running at 1.9%, well below 3.5% seen in the south west and east of England.
House prices in the heart of London are almost unchanged year-on-year. And a number of boroughs have actually seen price falls, reflecting the softening of buyer appetite in the capital during the peak of the pandemic.
Property values are 2.5% lower than a year ago in the City of London, while in the City of Westminster they are down 2.2%, and in Kensington and Chelsea, and Hammersmith and Fulham they have dropped by 1.7% and 1.4% respectively.
How busy is the housing market?
The level of buyer interest in homes on the market is currently 29% higher than it was in 2020.
It's fuelled in part by the extension of the stamp duty holiday until the end of September as well as the ongoing 'search for space', with many people carrying out a once-in-a-lifetime reassessment of their homes and lifestyles in the wake of multiple lockdowns.
First-time buyers also now have a wider choice of mortgages available to help them onto the housing ladder.
Unfortunately, the high level of buyer demand is not being matched by the volume of homes for sale, with supply 20.8% lower than last year, putting further upward pressure on prices.
Where are the hottest markets?
Wales, Yorkshire and the Humber, and the north west are the hottest regional housing markets. The time it takes between marketing a property and agreeing a sale in these locations is 10 to 15 days faster than it was in 2017 to 2019. These regions also have the strongest house price growth.
The ‘hottest’ city markets, where homes are being sold more quickly and price growth is strongest, include Wigan, Blackburn and Burnley. A typical property in these markets is selling three weeks faster than in 2017 to 2019, and annual price growth is at least 5.8%.
At the other end of the spectrum, homes in the heart of London – where house prices are almost unchanged on an annual basis – are taking nearly two weeks longer to go under offer.
The property market is also slower than a year earlier in Aldershot, Coventry, Edinburgh, Gloucester and Southampton, bucking the wider trend of faster moving markets. However, annual price growth is on the rise in all these cities.
What this could mean for you
First-time buyers
First-time buyers are continuing to head back to the housing market, boosted by increased mortgage availability, thanks in part to the launch of the government’s new 95% mortgage guarantee scheme.
This rise in activity, combined with the shortage of homes for sale, means you could face stiff competition from other buyers.
You may face less competition if you are looking for a flat although it is still the most popular property type in London.
Homeowners
Strong buyer interest in homes on the market, particularly three-bedroom family homes, means existing homeowners are in poll position if they are looking to sell and move up the housing ladder.
With potential buyers currently significantly outstripping the number of properties on the market, you could achieve both a good price and a quick sale for your existing home.
And you could benefit from the stamp duty holiday when you buy your next home if you start your search now.
On the flip side, you are also likely to encounter strong competition from other buyers when it comes to your next property, particularly if you are looking in one of the ‘hot’ markets in the north west, Yorkshire and the Humber or Wales, or you want a larger family home.
However, more homes are expected to be marketed for sale in the coming months as lockdown restrictions continue to ease and vaccines are rolled out further.
What’s the outlook?
Going forward, the level of buyer demand is expected to ease slightly as lockdown restrictions continue to be lifted and people spend time seeing family and enjoying leisure activities that they have not been able to do for a while.
That said, it is expected to remain strong during the second half of the year, driven in part by office-based workplaces confirming whether or not they will continue to offer flexible working practices.
Head of research says: “Households who have the opportunity to commute less frequently have more options when it comes to choosing where to live, and this could prompt a move.
“Likewise, older households will continue to review how and where they are living, with many more set to move for the first time in years.
“With an increased array of mortgages to choose from, first-time buyers will also remain active in the market.
“At the same time, supply constraints will continue to underpin pricing. The lack of supply is expected to hamper potential sales during this year, yet even so, we expect total transactions this year to rise to 1.5 million, marking one of the busiest years in the UK’s residential market in more than a decade.”
Top three takeaways
- The housing market is on course for its busiest year since the global financial crisis.
- More than 1.5 million homes are expected to change hands this year, 45% more than in 2020 and the highest level for 14 years.
- House price growth has almost doubled during the past year to stand at 4.1%.
How in-demand is your home?
The reopening of schools in March coincided with a surge in house hunting. Find out where buyer interest has soared the most – and discover how sought-after your home could be.
uyer interest in homes on the market has soared by 25% in the two months alone since schools reopened in March.
And our latest research reveals where buyer demand has surged the most in Great Britain as lockdown restrictions ease.
Stockport, Scarborough and Cambridge all top the rankings when it comes to rising demand - a useful gauge of buyers that are active in the housing market.
It comes as housing market momentum saw sales agreed on one in every 50 homes sold between 1 January and 15 April, up from one in every 100 homes a year earlier.
Caught your eye? Find out how sought-after your home could be with our handy map.
One and two-bedroom flats
First-time buyers and empty-nesters appear to be driving demand for one bedroom and two-bedroom flats.
The biggest rise in interest for homes of this size has been seen in Stockport and Pembrokeshire, where demand has jumped by 164% and 122% respectively since early March.
Flats in these locations, as well as other popular areas which have seen a spike in interest such as East Devon and the New Forest, offer suburban and urban living at a relatively low cost.
A number of locations within London’s commuter belt, including Windsor and Maidenhead, Brentwood and Three Rivers, have also seen a strong increase in demand for one and two-bedroom flats.
With average prices of below £250,000 for flats, these locations are likely to appeal to first-time buyers working in the capital.
Two and three-bedroom homes
Two and three-bedroom properties in areas where prices are below their regional average have seen the largest increase in interest from potential buyers.
While homes of this size remain in strong demand across Great Britain, the seaside resort of Scarborough has seen interest from potential buyers skyrocket 142%.
Although house prices in Scarborough are above the regional average, our data shows that they tend to be larger than in other parts of Yorkshire, meaning buyers get more bang for their buck.
Demand for two and three-bedroom homes in picturesque Weymouth and Portland, on the Jurassic Coast in the south west, where average homes cost £235,000, 15% below the regional average, has jumped 115%.
Meanwhile demand has soared by 111% and 108% respectively in Forest Heath in Suffolk and Falkirk in Scotland, both areas where prices are well below the regional average. Falkirk is consistently one of the fastest-moving property markets in Great Britain.
Four and five-bedroom homes
Demand for four and five-bedroom homes is being driven by the ongoing search for space, with buyer interest spiking in rural or coastal areas.
Boasting easy access to London and a range of Ofsted-rated Outstanding schools, Cambridge led the way with demand soaring by 182%.
Scenic areas in the south east, such as Hastings, which saw a 92% rise in demand, and Horsham and Surrey Heath, which both recorded a 79% increase, also feature strongly.
What's buyer appetite like in London?
In London, Hounslow topped the list when it comes to demand for one and two-bedroom flats, with buyer appetite climbing by 41%. It’s closely followed by Sutton, Enfield and Greenwich, which all posted a 39% increase.
Buyer demand for two and three-bedroom houses was highest in Harrow at 94%, followed by Bexley at 82% and Merton at 63%, all areas that have been popular with families in recent years.
Meanwhile, Sutton, Richmond upon Thames, and Kensington and Chelsea saw the biggest jump in interest for four and five-bedroom homes, with demand up by 50% or more.
The reopening of schools in early March was a key moment for the housing market, alongside the extension of the stamp duty holiday until the end of September.
But the surge in buyer demand has been fuelled by other factors too.
The pandemic has driven a 'search for space', with many people carrying out a once-in-a-lifetime reassessment of their homes and lifestyles in the wake of multiple lockdowns.
More recently, the launch of the government’s 95% mortgage guarantee scheme has led to more first-time buyers entering the housing market.
However, the level of homes on the market remains tight, with the total number of homes listed for sale so far this year 19% lower than average levels recorded in 2020.
What could all this mean for you?
If you live in one of these in-demand areas, it could be a good time to sell.
Check out My Home for an estimate of how much your property may be worth, to give you an idea of what your budget could be for your next home.
Speak with us to get an expert market valuation and guidance on how to best navigate this busy housing market.
Rental growth outside London hits four and a half-year high
Rents are rising fastest in the north east and the south west amid high levels of tenant demand and a shortage of homes to rent.
Rents outside London are rising at their fastest pace for four-and-a-half years boosted by strong tenant demand as lockdown eases and offices reopen.
The average cost of renting a home in the UK outside London rose by 3% year-on-year in the first three months of 2021 to stand at £780 per month.
Meanwhile, in London, rents were down 9.4% compared with a year earlier.
The high levels of demand from tenants, combined with a shortage of rental homes, meant the average property took just 16 days to let.
Rental growth hit a 10-year high in the north east, south west, East Midlands and Wales.
The north east, which is one of the most affordable rental markets in the UK, saw the strongest increase, with rents 5.5% higher in the first three months of the year than they had been a year earlier.
Rents in the region typically account for 22% of tenants’ income, compared with a UK average of 32%.
Rents increased by 5.3% in the south west year-on-year, while it was 4.8% higher in the East Midlands and rose by 3.8% in Wales.
At the other end of the scale, rents dropped by 9.4% in London year-on-year. Average monthly rents are now at the same level as they were in December 2013.
But the rate at which rents in the capital are dropping is easing, as tenant demand rises due to a combination of offices and amenities reopening and dramatically increased affordability.
At a city level, those in the north where renting remains more affordable, saw the biggest rent increases.
Newcastle led the way with average rents rising by 5% year-on-year, followed by Sheffield at 4.7%, Glasgow and Liverpool both at 4.1%, and Belfast at 3.8%.
The average cost of renting a home in all of the top five cities that saw the biggest increases was £665 a month or less.
What’s tenant demand like?
Demand for homes to rent was 59% higher in April than it was for the month in the more ‘normal’ markets between 2017 and 2019.
Outside of London, demand was also 32% higher than it had been in the same period of 2020.
As is the case with buyers, tenants are looking for more space, with the number of people searching for a property with access to a garden or with its own outdoor space doubling year-on-year.
This shift is creating additional levels of demand, with an increasing number of people choosing to move, rather than extend their lease.
And what about the supply of rental homes?
The supply of homes to rent in most areas is failing to keep pace with demand.
The number of new rental properties coming onto the market outside London was 5% lower during the first three months of the year than it had been in the same period of last year.
This trend is being driven by several factors.
Firstly, fewer tenants are making the move out of the rental sector and into homeownership, partly due to affordability constraints and partly due to a reluctance to make large investment decisions during the pandemic, putting further pressure on the supply of homes to rent.
At the same time, investment into the private rental market, usually made by buy-to-let landlords, has failed to regain the level seen in 2015, when the 3% stamp duty surcharge was introduced.
In fact, the number of properties purchased with a buy-to-let mortgage was 45% lower in 2020 than it was in 2015. And the number of homes in the private rental market has fallen slightly since 2016 as landlords rationalise their portfolios in the face of tax changes and additional regulation.
What could this mean for you?
Landlords
With strong tenant demand and supply of homes to rent scarce, you could be in a good position to let your property quickly.
And with preferences in the rental market shifting, your property could stand out if it comes with access to outside space.
Tenants
With the number of homes to rent failing to keep pace with demand, you are likely to face stiff competition if you are looking for a new rental property.
The good news for renters seeking more space is that nearly half of properties listed on the rental market currently have a garden or access to a shared garden. Plus, the number of these homes available to rent has risen during the first three months of the year to levels seen last summer.
What’s the outlook?
High levels of tenant demand across the wider UK market combined with constrained supply of homes to rent is expected to lead to further rental growth this year.
Head of research explained: “The increased availability of mortgages for those with lower deposits may result in more people leaving the sector to buy their first home through 2021, but the wider economic uncertainty will limit this trend.
“At the same time, the opening up of the economy and the slow return to ‘business as usual’ as the vaccine rolls out means demand will continue to build over the summer as more people move to rent their first property – although, as ever, this will be dependent on the economy opening up in line with the planned timetable.
“Demand will continue to rise in city centres as offices start to reopen and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.
“In London, where rents are down 9.4% on the year, a modest reversal in rental declines has begun, but it will be a slow build back to pre-pandemic levels in inner London. The recovery will be uneven and we expect new or recently refurbished properties to attract higher levels of demand in the second half of the year.”
Supply of family homes for sale falls to five-year low
The pandemic has fuelled buyer appetite for more space, leading to a sharp drop in the number of three and four-bedroom houses on the market.
The level of family houses for sale has hit a five-year low as buyer demand for properties offering more space significantly outstrips the supply of homes on the market.
The number of four-bedroom homes for sale has dived by more than 20% year-on-year in all regions of the UK, with Scotland seeing a near-60% fall.
The availability of three-bedroom properties is also down across the board, with northern regions the most affected.
Three-bedroom homes now account for just a quarter of all properties listed for sale, down from more than a third in 2017.
Overall, houses account for 59% of listings, compared with 76% four years earlier.
Why is this happening?
There is a mismatch between the level of homes for sale and buyer appetite across most of the market.
Home buyer appetite is up 27.5% so far this year compared with average levels in 2020.
Meanwhile, the total number of homes listed for sale in the first months of this year is 19% down on the 2020 average, despite the 50-day closure of the housing market in England (and longer in Wales and Scotland) last year.
But the situation is particularly acute for three and four-bedroom houses due to the pandemic-led ‘search for space’.
Family homes remain the most in-demand type of property, but the desire for them is not being matched by new listings, leading to dwindling volume of the properties on estate agents’ books.
What’s the background?
All regions have seen at least a 20% fall in the availability of family homes. Scotland has seen the biggest drop in four-bedroom properties, with listings diving by 58%, followed by the south west at 42% and the north west and south west at 42% and 40% respectively.
Northern regions have also seen a sharp fall in the availability of three-bedroom homes, with Scotland, Wales, the north west and the north east most affected, along with the south west.
What could it mean for you?
With buyer demand very strong, if you are thinking of selling a property, particularly a three or four-bedroom house, you could be in pole position to agree a sale.
And with the tight supply of family homes for sale, your property could stand out if you list it now.
Visit My Home to get an estimate of how much your property is worth and contact a local estate agent to get a full valuation.
The good news if you’re a buyer is that the tide is turning when it comes to the supply of homes for sale. Our data suggests that more properties have started coming onto the market since schools restarted.
This trend is expected to continue as lockdown measures are further loosened and sellers feel more confident about opening up their homes for viewings.
You could still take advantage of the stamp duty holiday on homes costing up to £500,000 if you start looking now.
But you are likely to face stiff competition for family homes, so register with us to receive alerts when a property meeting your criteria comes onto the market to help you get ahead.
While properties are moving quickly from being listed to ‘sale agreed’ stage, the time it takes to complete, when ownership legally changes hands, is still taking longer than before the pandemic.
So it’s worth preparing as much as you can in advance to increase your chances of benefitting from the stamp duty holiday.
Head of research, said: “The imbalance between supply and demand, which is creating a very tight market for family homes, will start to ease in the near term as homeowners becoming increasingly comfortable opening their homes to viewings, in turn building supply of new stock.
“The scale of buyer demand will also moderate from the peaks seen after Easter as lockdowns end across the country and there is some return to pre-pandemic normality.”
But Gilmore adds that the fundamental imbalance will remain, with the search for space among homeowners set to continue, particularly as some office-based businesses are now confirming their working practices will change for the longer-term.
Top three takeaways
- The supply of family homes for sale has hit a five-year low
- The number of four-bedroom homes on the market has dived by more than 20% year-on-year in all regions of the UK, with Scotland seeing a near-60% fall
- The supply of three-bedroom properties is also down across the board, with northern regions the most affected
Revealed: where buyer appetite for three-bedroom houses has soared the most
Thinking of selling your three-bedroom house? There is likely to be a high level of interest in it, particularly if you live in one of these areas, according to our research.
Buyer demand for three-bedroom houses has doubled in some locations during the past year as the pandemic-induced search for space continues.
Braintree in Essex has seen the biggest surge in buyers looking for one of the properties, with demand soaring by 107% year-on-year, according to our research.
There are also twice as many buyers searching for a three-bedroom house in Monmouthshire in Wales as there were a year ago, while demand is 96% higher in Knowsley in Merseyside, and 90% up in Northampton.
Breckland in Norfolk, East Northamptonshire, Gedling in Northamptonshire, and Northumberland have all also seen an increase of 85% or more in the number of buyers searching for a three-bedroom house.
Selby in North Yorkshire and Sedgemoor in Somerset make it into the top 10 ranking of locations that have seen the biggest growth in buyers looking for a three-bedroom house too. Appetite in these areas has risen by 78% and 77% respectively.
Other areas that made it into the top 20 ranking are Kingston upon Hull, York, Brentwood, North Tyneside, Eastleigh, Stockton-on-Tees, Bromsgrove, Barnsley, Redcar & Cleveland, and Havering in London.
But the growth in demand for these properties has not been matched by an increase in the supply of three-bedroom houses for sale.
All of the top 20 locations that have seen the biggest increase in buyers interested in a three-bedroom house have seen a fall in the number of these properties listed for sale, apart from Stockton-on-Tees, where supply has risen by just 4%.
Selby has seen the biggest drop in the number of three-bedroom homes on the market, with these falling by a third, followed by Braintree at 32% and Knowsley at 27%.
Why is this happening?
Three-bedroom houses are attracting the largest levels of home buyer demand across the country.
While the overall rise is being driven by lockdown-weary people looking for more space, there are a number of trends making individual locations particularly popular.
Many of the places in the top 20 are good commuter locations due to their proximity to regional cities, including Knowsley, Gedling, Selby, North Tyneside and Bromsgrove.
Others, such as Northampton, Monmouthshire and Sedgemore have good connectivity through motorways and railway links.
The more rural locations may also have seen an uptick in demand due to people wanting to move to the country as a result of the pandemic.
Finally, affordability is also likely to be a driver, with the cost of three-bedroom homes in Hull, Barnsley, Knowsley, Breckland and Havering, in London, an average of 20% below the regional average.
Who does it affect?
The surge in demand for three-bedroom houses is good news if you own one of these properties and are thinking of moving. There is likely to be a high level of interest in your home, particularly if you live in one of the areas in our list.
Given the constrained supply of these properties for sale, if you list your home now, it is likely to stand out. You could also be a in a good position to benefit from the extension of the stamp duty holiday on your next home.
You can find out how much your home could be worth on Zoopla, with an instant online estimate based on market data. You can also track your home and other properties you’re interested in so you’re ready to move when the time is right.
If you are looking to purchase a three-bedroom property, our research suggests you are likely to face significant competition from other potential buyers.
So it is important to be organised and be prepared to make an offer quickly if you see a home you like.
What’s the background?
Despite the supply constraints, there has still been a significant increase in the volume of sales of three-bedroom homes.
The number of these properties changing hands has soared by 120% in Stockton-on-Tees, while sales are 84% higher in Sedgemoor and 66% up in Redcar and Cleveland.
Our ranking is based on the locations in Britain where there's been the largest growth in buyer demand for three-bedroom houses in the first three months of the year compared with the average for 2020.
Top three takeaways
- Demand for three-bedroom houses has doubled in some locations during the past year as the pandemic-induced search for space continues
- Braintree in Essex has seen the biggest surge in buyers looking for one of the properties, with demand soaring by 107% year-on-year
- All but one of the top 20 locations that have seen the biggest increase in demand for three-bedroom houses have seen a fall in the number of the properties listed for sale
Value of UK homes sold doubles as pandemic-led search for space continues
One in 50 homes has changed hands since the start of the year, our latest House Price Index shows.
The value of homes changing hands has nearly doubled in the first 15 weeks of this year compared with the same time period in 2020.
One in every 50 homes was sold subject to contract between 1 January and 15 April, up from one in every 100 homes a year earlier, according to our latest House Price Index.
Overall, properties collectively worth £149bn have been transacted during this time period, a level that would not normally be reached until the end of June, as the pandemic-led search for space continues.
Glasgow, Bristol, Nottingham, Stoke-on-Trent and Middlesbrough are the five busiest housing markets.
What's happening to house prices?
Annual house price growth tracked at 4% in March, down from 4.5% in January. While this indicates a slight softening in the pace of growth, it remains nearly double the 2.1% recorded for the same month last year.
Northern regions, where affordability is less stretched, continued to see the biggest increases, with Wales leading the way with a rise of 5.9%, followed by Yorkshire and the Humber at 5.3% and the north west at 5.2%.
By contrast, in London, which has the highest average house price for any region, annual growth was just 2%.
Cities in northern regions also logged the biggest price gains, with Manchester and Liverpool retaining the top spot at 6.5% and 6.3% respectively, followed by Leeds, Nottingham, Leicester and Sheffield, which also saw rises of 5% or more.
At the other end of the scale, prices fell by 1.7% in Aberdeen, as the city’s property market continued to be impacted by the fall in the oil price, while Oxford and Cambridge, which have high average house prices, recorded relatively muted growth of 1.6% and 2% respectively.
How busy is the housing market?
Home buyer appetite peaked in the week following Easter, when it was running at double the level seen in the comparatively normal markets of 2017 to 2019.
It is currently 27% higher for the year to date than in 2020 as the stamp duty holiday continues to stoke demand.
There has been a slight slowdown in interest from potential buyers since lockdown was eased on 12 April, as households focus on catching up with friends and family and enjoying leisure amenities that have not been available since January.
The intense activity has led to a sharp drop in the number of homes on the market, with supply in the first half of April nearly 30% below the levels recorded for the same time period in 2017 to 2019.
Furthermore, the total number of homes listed for sale so far this year is 19% lower than average levels recorded in 2020, despite the 50-day closure of the housing market in England (and longer in Wales and Scotland) last year when little-to-no homes were put up for sale.
The third lockdown also saw an increased lag time between homeowners looking for a new property and listing their current home for sale, further exacerbating the imbalance between supply and demand.
That said, the tide does appear to be turning, with evidence suggesting listings have started to rise again since schools re-opened six weeks ago.
What could this mean for you?
First-time buyers
A rising number of first-time buyers are coming to the market, buoyed by the government’s new mortgage guarantee scheme and the return of mortgages for people with only small deposits.
Aspiring homeowners can also still take advantage of the government’s Help to Buy equity loan for new-build homes – as well as first-time buyer stamp duty relief.
The situation is putting pressure on already constrained levels of properties for sale, although availability is better for flats than it is for family homes.
Even so, competition is likely to be intense, and buyers will need to move fast when they see a home they like.
Homeowners and landlords
As the pandemic-triggered search for space continues, three and four-bedroom houses remain in high demand.
It means that homeowners and landlords who are considering selling a family home are likely to be in a prime position.
But they may face a shortage of choice when looking for a new property to buy.
However, as more homes come onto the market now that schools have re-opened, the choice is set to improve.
And homeowners and landlords preparing to buy a new property now could still be in a position to take advantage of the stamp duty holiday.
What's the outlook?
The imbalance between the supply of homes for sale and buyer demand will start to ease in the near-term as homeowners become increasingly comfortable opening their homes for viewings.
The scale of buyer demand is also expected to moderate as the roadmap out of lockdown continues and there is some return to pre-pandemic normality.
head of research, explained: “The fundamental imbalance will remain. Demand will remain strong as the ‘search for space’ among homeowners has further to run, especially as some office-based businesses are now confirming how their working practices will change in the longer-term.
“More flexible working arrangements open up new opportunities for homeowners to move to a further-flung location.
“At the same time, the roll-out of the 95% mortgage guarantee will mean more demand from first-time buyers, fuelling demand without replenishing supply.”
House price growth is also expected to ease as the extreme imbalances between supply and demand start to unwind, while the end of the stamp duty holiday and the paring back of government support over the summer will also act as a drag on the market.
That said, property values will continue to be underpinned by the shortage of homes for sale, with growth likely to be strongest in the more affordable markets in the north and Midlands.
Government exclusive: 'Why we've launched our 95% mortgage guarantee scheme'
The minister of state for housing reveals why applications opened for a new mortgage guarantee scheme this week.
The Rt Hon Christopher Pincher MP, minister of state for housing, explains how the government is determined to do everything it can to support first-time buyers and the housing market.
In a year that has tested us like no other, we have never felt more of a connection to the place we call home and the sense of security and comfort that comes with it.
Recent polling has revealed that the desire for home ownership has increased during the pandemic with many people looking to take their first step onto the housing ladder.
We recognise the challenges facing prospective first-time buyers and for many that dream of home ownership feels out of reach.
That is why this week applications have opened for our 95% mortgage guarantee scheme – just one of a range of flexible home ownership schemes introduced by this government.
Polling has revealed that 69% of private renters and 63% of people living at their family home struggle to find many mortgages with a low deposit.
This will enable more households to access mortgages on both new-build and existing homes, without the need for large deposits.
First-time buyers will be able to purchase a home with only a 5% deposit – meaning they can purchase their home having saved a smaller amount upfront.
As we build back better from the pandemic, we are determined to do everything we can to support first-time buyers and the housing market.
We are building more homes – in 2019 a pledge to build 300,000 new and attractive homes a year was announced with an investment of over £12bn in affordable housing over the next five years – the largest investment in a decade.
Extending the aspiration of home ownership is a central mission of this government. The 95% mortgage guarantee scheme is another step in levelling up the country and bridging the home ownership divide.
How much hidden equity is in your home?
Daydreaming of selling up and buying a bigger home? It could become a reality, with 45% of homeowners undervaluing their home by an average of £46,300, our research shows.
Almost half of UK homeowners are undervaluing their home, with their properties worth nearly £50,000 more than they realised.
Only three out of 10 people have an accurate idea of how much their home is worth, with 45% undervaluing and a quarter overvaluing their property, according to our inaugural Hidden Equity Survey.
Those who underestimated the value of their home discovered it was worth £46,305 more than they thought, which equates to roughly 1.5 times the average UK salary. Meanwhile, those who overvalued it were out by around £44,313.
Nearly one in 10 homeowners whose property was worth more than they expected found that it was valued at over £100,000 more, with 40% of these located in London and the south east.
At a national level, this means that more than one million UK properties could be carrying six figures of hidden equity – unbeknown to their owners.
When all the survey results were taken into account, the net result was that the average home is worth £9,470 more than its owner realised, meaning UK homeowners are collectively sitting on a staggering £237bn of hidden equity.
What does the picture look like in London?
Some 35% of London homeowners found their property to be worth more than they expected, by an average of £117,000.
Conversely, a similar amount – 37% – said their home was worth less than they thought, by an average of £49,000. Meanwhile, 28% of homeowners said the value was in line with what they expected.
When all the survey results were taken into consideration, the average home in the capital is worth £22,846 more than its owner anticipated. To put this into context, that’s more than double the £9,470 national average.
What impact did hidden equity have on homeowners?
The research, which was based on homeowners who had their home valued via an estate agent or sold it in the past three years, highlights the significant gap between how much people think their home is worth and what it really is.
Nearly a third of people whose home was worth more than they realised said they were overjoyed, while 6% described it as feeling like they had won the lottery.
Among those who went on to sell their home and benefit from the hidden equity, the unexpected windfall had a significant impact, with 81% saying the additional money had enabled them to improve their lifestyle.
Exactly half said they were able to move to a better property than they had expected, such as one with more bedrooms or in a nicer area, while 18% of those aged 55 to 64 said they could retire earlier. For those able to retire earlier than expected, it was on average by more than three years.
Around 13% said it had enabled them to upgrade their car, with the same proportion going on more holidays and 8% using the money to help their children get onto the property ladder.
For the seven in 10 homeowners who did not know the true value of their home until they got it valued by an estate agent, 45% said they would have made different financial decisions in previous years if they had been aware of their hidden equity.
Nearly half of those again – 21% of respondents – said they would have made ‘significantly’ different decisions.
Some 31% of homeowners whose home was worth less than they expected said they would have worked harder to build up their savings if they had known the true value of their property, while 12% said they would have put more money into their pension. Others said they would have spent less on holidays, cars and luxury items.
What could this research mean for you?
Our survey shows that many homeowners may be in for a nice surprise if they check the current value of their home.
There are significant benefits to knowing exactly how much your home is worth, particularly if you are thinking of selling it, as its value could impact the type of property or location you look to move to.
The supply of homes for sale is tight, so if you list your home now it will not only stand out, but you will also be in a good position to take advantage of the stamp duty holiday on your next step on the housing ladder.
Head of research at, explained: "The effects of the pandemic over the last 12 months have been felt in the housing market, with many households reassessing how and where they want to live.
"There is soaring buyer demand but this is not currently being matched by homes being listed for sale. Homeowners considering a move could be in pole position in their local market if they offer their property for sale, and could be set to unlock hidden equity."
Top three takeaways
- More than half of homeowners undervalue their home, with their properties worth nearly £50,000 more than they realise
- Only three out of 10 people have an accurate idea of how much their home is worth, with 45% undervaluing and a quarter overvaluing their property
- Nearly one in 10 homeowners found their home was worth more than £100,000 more than they thought, with 40% of these properties located in London and the south east
How the latest easing of lockdown restrictions could affect you
The housing market remains open for business but you still need to take precautions. Here’s how to move home safely as England enters stage two on the roadmap out of lockdown.
The government has updated its guidance on moving home as lockdown restrictions ease further in England.
The housing market remains open and people are able to both continue with planned moves and view properties.
But precautions still need to be taken and the government has warned it may become necessary to pause all home moves locally or nationally at some point to manage the spread of Covid-19.
Remember that you will be required to follow social distancing measures at all stages of the moving process.
If you have any symptoms of Covid-19 or test positive for the virus, you should immediately self-isolate at home for at least 10 days.
Here’s how to move safely under the latest guidelines.
Preparing to move home
You can put your home on the market and look for properties to buy or rent, but the process is likely to be different compared with pre-Covid-19 times.
Estate agents may require you to make an appointment ahead of time, rather than just walking into their offices. When visiting an estate agent’s office, you should also wear a suitable face covering.
Estate agents can visit your property to take photographs or videos, but when looking for a property yourself it is recommended that you carry out initial searches online.
As well as finding properties for sale and rent on blackstones, you can search new-build homes from leading developers.
Viewings
Initial viewings should be done virtually wherever possible, and you should only visit in person if you are seriously considering making an offer on the property.
Viewing occupied homes should be done by appointment, and ‘open house’ viewings cannot take place.
If you are interested in a new-build home, you should contact the developer to make an appointment to view the show home or a particular plot you are interested in.
When viewing a property in-person, you should wear a face covering, avoid touching surfaces wherever possible, and wash your hands or use hand sanitiser regularly.
If you need to stay somewhere overnight in order to view properties, you can do so in self-contained accommodation, but you must only stay within your own household or support bubble.
If people are viewing your property, you should open all internal doors, ensure surfaces, such as door handles, are cleaned after each viewing, and allow access to handwashing facilities, ideally with separate towels or paper towels.
It is recommended that you wait outside the property while viewings are taking place.
Making offers or reservations
You can make or accept an offer, or reserve a property as normal, but you should be aware that there is a greater risk that home moves may need to be delayed if someone involved has Covid-19 symptoms, so contracts and agreements should be as flexible as possible.
You can visit a property again after having an offer accepted but you should follow the same measures as with an initial viewing.
Tradespeople can also visit the property to carry out inspections but only one person should visit the property at a time and social distancing and hand hygiene measures should be followed.
Property searches and surveys
Your legal representative should be able to carry out searches on your property online, while surveyors can also undertake surveys on it.
Where possible, inspections should take place by appointment only, with only one person visiting the property at a time, and social distancing measures should be followed.
If your home is being surveyed, make sure the surveyor has access to all parts of the property they need to inspect, so that you can minimise contact with them, such as by staying in another room.
Finalising your move
Once you have exchanged contracts or signed a tenancy agreement, you have entered into a legal agreement to purchase or rent a property.
Even so, you should be prepared to delay the move if necessary, such as if someone involved in the transaction develops Covid-19 symptoms.
Your legal advisor should help to ensure that any contract you enter into has sufficient flexibility to allow the purchase to be delayed if one of the parties develops Covid-19 or has to self-isolate.
Moving your belongings
Removal firms are able to carry on working and you should contact them as early as possible in advance of your moving date.
If removal firms are unavailable, another household can help you move but you must follow social distancing and hand hygiene measures where possible.
It is recommended that you and others in your household try to do as much of the packing yourself as you can, and that you clean your belongings where possible.
While removers are in your house, you should keep internal doors open and try to minimise contact with them, maintaining a distance of at least two metres where possible.
You should not provide refreshments but should give access to handwashing facilities with separate towels or paper towels.
All parties should wash their hands regularly or use hand sanitiser and avoid touching surfaces where possible.
What’s hot in the housing market right now
The search for space means houses are more popular than flats, while good affordability is also driving buyer interest in northern regions.
What’s selling the fastest?
Houses are selling three weeks faster than flats as the lockdown-led search for space continues.
It currently takes an average of just 42 days from being listed for sale for houses to reach the 'sale agreed' stage, compared with 62 days for flats.
Homes in the north east and Yorkshire and the Humber are selling the fastest, with sales agreed in an average of just 38 days in both regions.
Meanwhile, homes in the north east and north west have seen the biggest reductions in the time it takes to sell, with the length of time they are listed for before receiving an offer dropping by 17 days and 12 days respectively.
What’s the most sought-after type of property?
Family homes are the most coveted type of property across the UK, with demand for three-bedroom homes jumping by 30% in the week following the Budget.
Unsurprisingly, the popularity of houses is pushing their prices higher, with values rising by an average of 4.9% in the past year, compared with an increase of 1.9% for flats.
But there are pockets of the country where flats are popular, with demand for one and two-bedroom flats in London and the south east rising after the Budget, likely reflecting increased interest from first-time buyers.
Where are the hot markets?
More than two-thirds of homes currently for sale in the north east, north west and Yorkshire and the Humber are listed for less than £250,000, meaning buyers in these regions have more opportunity than anywhere else in the country to secure the stamp duty holiday saving before 30 September.
High demand in these regions is driving strong house price growth. At a city level, Manchester and Liverpool posted annual gains of more than 6%, while prices have risen by more than 5% Leeds and Sheffield, with values in Nottingham and Leicester in the East Midlands on a similar trajectory.
And house price growth in the Midlands, north of England, Wales and Scotland is at an almost 10-year high, fuelled by the relative affordability in these areas.
Why is this happening?
The current trends in the property market are being driven by a combination of factors.
Successive lockdowns have prompted many people to reevaluate their homes and lifestyles, leading to a search for space.
And the extension of the stamp duty holiday is driving demand for homes costing up to £500,000, as well as those in the £125,000 to £250,000 price bracket, which will benefit from being stamp duty-free until 30 September.
Meanwhile, a mismatch between the supply of homes for sale and buyer appetite is putting upward pressure on house prices. Average demand is 13% higher this year than last year, while the number of sellers has fallen by 13%, likely as a result of people being unwilling to open up their homes for viewings during lockdown.
Finally, more first-time buyers are expected to enter the market from 1 April once the government’s new 95% mortgage guarantee scheme is launched.
News of the scheme is thought to be behind the recent increase in interest in flats in London and the south east.
What’s the outlook?
The housing market in general is expected to remain busy as lockdown measures are eased. But despite the stamp duty holiday extension boosting housing sales, house price growth is expected to moderate later in the year as government support measures are withdrawn.
Head of research, explained: “The search for space is driving continued demand for family homes, which means prices for houses are rising faster than flats, and houses are also selling more quickly.
“The prospects for the housing market over the next year have improved on the back of Budget. The continued search for space, the stamp duty extension and mortgage guarantees will support activity levels and headline house price growth up to the end of June.
“Yet the pathway out of the lockdown, and the route to a full re-opening of the economy and unwinding of support measures, is unlikely to be simple or smooth.
“We still expect house price growth to moderate later in the year, but overall transactions are set to benefit from an additional boost following the stamp duty extension and tapering.”
Top three takeaways
- Houses are selling three weeks faster than flats as the lockdown-led search for space continues
- The north east and Yorkshire and the Humber are the fastest-moving markets in the UK, with sales agreed in an average of just 38 days in both regions
- Family homes are the most coveted type of property across the UK, with demand for three-bedroom homes jumping by 30% following the Budget