The resurgence of the property market, which has seen a significant uptick in demand for homes, is expected to delay property prices tumbling, according to Zoopla.
The property portal says that since the market officially reopened on May 13, data starting to feed through points to a resumption in the upward pressure on house prices recorded in the first two months of the year.
This is evidenced by asking prices for properties marked as sold on the website registering a similar growth rate of the first two weeks of June as those rising at around 7% in the first three months of 2020.
Most new sales, according to the analysis, will complete between August and October, allowing annual house price growth to remain between 2% and 3% over the next quarter.
Zoopla says that while many commentators have predicted annual house prices falls for the calendar year due to Covid-19, it expects any falls to only become clear in the final months of 2020.
Despite positive signs, demand could weaken in the coming weeks as the economic impact of the pandemic starts to affect unemployment levels and people’s finances.
Zoopla’s index suggests UK house price growth is up 2.4% on the year, increasing from 1.6% at the start of 2020. Over the past 12 months, Nottingham has recorded the highest house price growth at a rate of 4.3%, followed by Manchester at 3.9%.
The worst-performing areas during this period are Oxford (-0.6%) and Aberdeen in Scotland (-2%). Following the reopening of the Welsh market on June 22, demand for housing has now rebounded to a level close to that seen in England.
Rebounding of new sales agreed, subject to contract, has been highest in the North of England, with Leeds, Sheffield and Manchester leading the way with sales levels up by over a fifth since February.
Cities not keeping pace with pre-pandemic levels of new sales, meanwhile, include Cambridge, Newcastle and Glasgow. This, according to Zoopla, is down to a lower supply of homes in these locations.
Despite the overall flow of new homes for sale reaching pre-Covid-19 levels, the number of homes for sale per estate agency branch is 15% lower than a year ago. Zoopla says that a lack of supply underpins its assertion that house price growth will remain steady in the coming months.
“The rebound in housing market activity has taken many in the industry by surprise. It is welcome news given the projections for falling economic growth and rising unemployment,” explains Richard Donnell, Zoopla’s director of research and insight.
“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.”
He adds that returning pent-up demand and new buyers entering the market is creating upward pressure on prices in the face of a lower supply of homes for sale due to lockdown restrictions.
“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years,” says Donnell.
“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.”
This post has originally been featured in Property Investor Today.