UK property demand surges to new high amid stamp duty stampede

Saleha Riaz
·3-min read
The UK housing market recorded £149bn worth of property sales in the first 15 weeks of 2021, almost double the value of homes sold in the same period in 2020 and 2019. Photo: Getty Images
The UK housing market recorded £149bn worth of property sales in the first 15 weeks of 2021, almost double the value of homes sold in the same period in 2020 and 2019. Photo: Getty Images

Demand for UK property is up 27.5% year to date in 2021 when compared with average levels in 2020, but has fallen again since the first stage of lockdown easing, Zoopla's latest house price index revealed.

“The combination of home schooling ending, the stamp duty holiday extension, the ‘search for space’ and the return of first-time buyers created a surge in buyer demand,” said Gráinne Gilmore, head of research, Zoopla.

The UK housing market recorded £149bn ($206.5bn) worth of property sales in the first 15 weeks of 2021, almost double the value of homes sold in the same period in 2020 and 2019.

One in every 50 homes was sold between 1 January and 15 April, up from one in every 100 homes during the same period last year.

Watch: How much money do I need to buy a house?

The cities seeing the highest levels of demand in Q1 were Birmingham, Swansea, Glasgow, Liverpool and Leicester, where average house prices are all under £200,000.

However, the report warned that the scale of price growth will slow in the coming months, "especially as we move towards Q3 when the stamp duty holiday extension comes to an end and government support for the economy starts to be pared back."

The tax break, which was due to end on 31 March, was extended until 30 June.

READ MORE: Stamp duty cuts extended and 5% deposit mortgages from April

After the first major easing of lockdown on 12 April in England, demand levels began to fall again as households began doing things they had not been allowed to do due to stay at home orders. This includes catching up with friends and family, and taking advantage of leisure activities and amenities, the report said.

Demand is likely to continue to ease as more parts of the country emerge from lockdown, but appetite will remain above average levels for this time of year through Q2, it added.

The report also said that the number of homes being listed for sale has not kept pace with buyer demand, eroding the total number of homes for sale in most markets, with a particular drop in the availability of family houses.

In the first half of April, the number of homes for sale was nearly 30% lower than average during the same period in 2017 to 2019.

This was down to several factors, including the rise in activity among first-time buyers who have nothing to sell, according to Zoopla.

Looking forward, the report said the tight market for family homes will limit further growth in sales volumes in the short-term but supply will start to build as homeowners become increasingly comfortable opening their homes to viewings, as lockdown eases.

"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," the report said.

"More flexible working arrangements open up new opportunities for homeowners to move to a different location," it added.

Watch: What do stamp duty cuts mean for buyers and house prices?