House price growth close to three-year high!

  • Dec 2nd 2020

The housing market is set to have it's strongest December in more than a decade, as more buyers rush to move home before the stamp duty holiday ends in March 20201, pushing house prices by 3.5% since December 2017.

The average house price is now £223,500, according to the latest House Price Index, with inflation expected to reach 4% by the end of this year. UK house price growth has jumped to 3.5%, the highest for almost three years. That's up from 1.2% a year ago.

Although the coronavirus pandemic took hold of the property market earlier this year during the first lockdown, this has resulted in a remarkable turnaround from the Stamp Duty holiday announcement and pent-up demand from homeowners, who have evaluated their living arrangements during the lockdown.

With an increase in the property sales pipeline across the country, this means that around 1.1m homes are expected to exchange this year, only 6% lower than 2019, an astonishing small decrease considering the property market was closed for four months this year!

Property sales surged with buyer appetite, as many took time to reflect their priorities in what they want in a home during the first lockdown. Space is a common issue for many households, and with many looking for a larger home, this has created a surge in property sales. However, property prices are remaining strong, and in some areas higher in comparison to last year.

This is because of the lack of stock soon after the property market opened after the first lockdown. There are around 38% more properties for sale in comparison to last year, due to more sellers looking to benefit from higher house prices and the Stamp Duty holiday. It's expected that the Stamp Duty holiday announcement will lead to 100,000 additional sales completing before March 2021.

Richard Donnell, director of research & insight at Zoopla, said: "It has been a rollercoaster year for the housing market which is ending on a strong note, with demand and sales agreed still more than 30% higher than this time last year.

"House price growth has hit a three-year high and is set to increase further in the short term.

"The high volume of sales agreed this autumn will spill over as completed sales in 2021 and this will support the overall number of sales completed in 2021 at 1.1 million.

"It has been a remarkable turnaround and completed sales look set to fall just 6% short of last year despite a two-month closure of the market in England."

But there are some challenges ahead as the country battles the impacts of the pandemic on the economy and day-to-day life, according to Donnell.

He explained: "The impact on the housing market is less than in previous downturns as sales volumes have already fallen in recent years and affordability levels are far from over-stretched.

"We expect housing demand to slow further over 2021 and this will ease the upward pressure on prices which we expect to be 1% higher by December 2021.

"Lower sales volumes over the second half of 2021 and a growing scarcity of supply will offset weaker demand and support headline pricing levels."

If you are looking to sell your property and benefit from the current property prices and Stamp Duty holiday, speak with one of our property experts by calling 0116 266 9977.

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