Head of research, explores the latest housing trends – and looks at what’s in store for home movers in the months ahead.

Q. First things first, what’s happening to house prices? What are the hottest markets?

A. House prices edged up by 0.3% in January. It means that annual house price growth now stands at 4.3%, the highest rate since April 2017.

The hottest markets in terms of house price growth are Wales and the north of England. At a country and regional level, annual house price growth ranges from 5.6% in Wales and 5.5% in the north west of England, through to 2.8% in London.

Breaking it down to a city level, Manchester and Liverpool continue to lead the way with the strongest house price rises, with annual growth at 6.3% and 6.8% respectively.

Q. What’s the level of demand like from people wanting to buy a home at the moment?

A. It’s been a really strong start to the year. A lot of buyers have been motivated by the stamp duty holiday, with savings of up to £15,000 on offer. There’s also a cohort of buyers who, driven by the experience of successive lockdowns and restrictions, are searching for homes with more space.

As a result, the level of interest from buyers looking for a new home is up 12.4% on last year.

And this buyer demand is translating into transactions, with the number of housing sales agreed also up 10.1% year-on-year.

Q. And how has the current lockdown impacted sellers?

A. Although the housing market remains open for business, the current lockdown has stifled the supply of homes for sale. The number of homes on the market in the first six weeks of 2021 is down 13.8% year-on-year. And the level of homes being listed for sale is also 14.5% down compared with the same period last year.

Our data also points to increasing interest from first-time buyers, who have no property to sell when they move.

This mismatch between the level of interest from buyers and the supply of homes for sale is apparent in most regions across the country. In the north east, buyer demand is running more than 40% higher than the same period last year – yet the level of new supply has shrunk.

The one exception to this trend is London. It’s important to note that while buyer demand is down 17% year-on-year, it’s still well ahead of the average based on previous years.

Q. How are these trends impacting different people in the housing market?

A. Our data suggests that first-time buyers are returning to the housing market. The level of interest from people looking to step onto the housing ladder was up 5% in the first six weeks of this year compared with the last three months of 2020.

We’ve also seen a 18% increase in the number of sales agreed on homes worth between £100,000 and £250,000, a price band typically associated with first-time buyers, in the first seven weeks of this year.

We expect this trend to continue beyond the newly-extended stamp duty holiday as most first-time buyers are not affected by the tax break.

This comes as the availability of mortgages for buyers with a 5% or 10% deposit gradually picks up. While mortgage lending to buyers with small deposits have not returned to the levels seen in early 2020, it is on an upward trajectory.

Existing homeowners continue to be motivated by a once-in-a-lifetime reassessment of their homes and lifestyles after successive lockdowns.

However, some have been reluctant to list their homes for sale, possibly deterred by social distancing measures. We expect homeowners to press the green light on marketing their homes as lockdown eases and further progress is made on the vaccine roll-out.

Our research also points to a growing number of previously rented properties being listed for sale. This is particularly noticeable in London, where 13% of homes marketed in the last three months of 2020 were previously rented.

There’s several possible reasons for landlords reassessing their portfolios. Firstly, landlords may be looking to crystallise capital gains amid speculation that capital gains tax changes could be on the way.

Secondly, they may also be eager to take advantage of momentum in the housing market, with house prices close to a four-year high.

And thirdly, they may be reacting to the changing dynamics of the rental market, with negative pressure on some city centre rents.

It’s an interesting trend, but it’s worth noting that the rented homes being put up for sale account for less than 1% of private rented sector stock.

Q. The Chancellor made some important announcements in the Budget. How will they affect the housing market over the coming weeks and months? 

  1. The Chancellor’s announcements at the Budget, which included the extension of the stamp duty holiday and the launch of a 95% mortgage guarantee scheme, has already prompted a spike in interest from people looking to buy a home.

This demand jumped 23% in the days immediately following the Budget. To put the figure into context, that’s 47% higher than this time last year.

We expect the housing announcements unveiled by the Chancellor to fuel buyer demand for the next three to four months.

Meanwhile, the flow of homes being listed for sale is gradually improving as lockdown restrictions begin to ease. However, the number of homes being actively marketed remains almost 25% down on last year.

The Budget announcements mean that there will be less of a drop-off in housing sales than we had initially thought for the months ahead, with the tapering of the stamp duty holiday preventing a ‘cliff edge’. However, we do expect housing market activity in general to slow down through the summer.

The strength of the housing market later in the year depends on the transition from an economy in lockdown towards normality. Current trends suggest that house prices will continue to rise and there’ll be a modest uplift in the number of homes that are sold in 2021.

Q. What impact will the stamp duty extension have on people looking to move home?

  1. The stamp duty holiday extension is great news for all buyers who agreed a sale over the last two months with little or no expectation of completing their purchase in time to secure the stamp duty savings.

Tens of thousands of buyers who are currently in the process of agreeing a sale may save up to £15,000. We estimate that a further 280,000 buyers will benefit from savings of up to £2,500 as a result of the tapered extension, as long as they complete their purchase by the end of September.

Our research shows how the savings vary across the country. Buyers in London are set to save £8,000 in stamp duty, the highest figure in England. Some 22,000 buyers who have already agreed a sale in the city are set to benefit from £174m in savings in total.

Meanwhile, 46,000 buyers who have already agreed a sale in the south east of England will collectively save £271m, more than anywhere else in the country. The average buyer in the region will save nearly £6,000.

Thank you.