The annual rate of UK house price growth edged up to 2.7% in June, after rising 0.2% on the month according to the latest data by Zoopla.
Buyer demand has seen strong growth since housing markets reopened, however the number of new homes being listed has not experienced the same increases. This is creating an imbalance of low supply and high demand and is contributing to the house price growth seen in Zoopla’s data.
Manchester, Liverpool and Sheffield are in the top six cities for levels of annual house price growth. According to the data, London has seen the biggest market changes since the stamp duty holiday was implemented by the Chancellor, as sales jumped by 27% in the weeks after the change in the capital.
Using these findings Richard Donnell, director of research and insight at Zoopla, has predicted the outlook for the market and for house prices in 2021.
Donnell said: “COVID and the lockdown have shifted the dynamics of supply and demand across the housing market.
“The staggered reopening of housing markets across countries and the added impetus from the stamp duty holiday mean we expect buyer demand and new sales volumes to hold at current levels over the next two months. The net result will be continued support for house price growth at current levels over the second half of the year. Regional cities in northern England and the Midlands have the strongest underlying trends.
“We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021. Further government support for the economy cannot be ruled out however, while forbearance by lenders, and the availability of the mortgage payment deferrals, which can start up until the end of October for three to six months, is likely to limit the scale of downside for house prices. Much depends on how businesses respond to the outlook and their decisions on staffing levels and the knock on impact for unemployment.”
Despite the increases, the number of sales agreed in the year to date is still 20% lower than over the same period last year, with sales volumes this year looking to be around 15% lower than in 2019.
Steve Seal, managing director at Bluestone Mortgages, added: “It is promising to see house sales returning to pre-COVID levels and buyer demand at a healthy level, as indicated by today’s Zoopla figures. While the stamp duty cut should help rally demand in the short-term, we will need to address a more crucial issue over the long-term – supporting the growing numbers of borrowers who are not able to secure high-street lending once the pandemic subsides.
“What’s discouraging is that being rejected for mainstream finance could become the new reality for many after the crisis, particularly for the huge numbers of people who have been financially impacted by COVID-19. This new cohort of “non-vanilla” borrowers – potentially numbering in the thousands – could play an important role in the long-term recovery of the housing market, though this can only be achieved if affordable lending is made available to them post-crisis. Over the coming months, it will be key that specialist lenders prepare for this new reality while focusing on their short-term recovery. This will help ensure that underserved borrowers are properly supported in the years to come.”
This post has originally been featured in Property Wire.