Is the Housing Market the Economic Main Event of 2021?

Housing Market figures published in January by Zoopla show clear evidence that the demand for properties in January 2021 has outperformed the same period last year.

So is the housing market the main event for the economy in 2021? It might just be! 

  • Demand for homes is up 13% on the same period last year
  • 8% increase in new sales agreed.
  • Drop of 6% in available properties
  • House prices are rising almost uniformly across all English regions
  • The greatest impact is being felt where house prices are currently lowest.

The housing market has seen a quick start to 2021 despite the latest lockdown encouraged by the stamp duty holiday. The Coronavirus pandemic continues to drive moving intent amongst buyers, but the latest lockdown has meant that sellers remain cautious despite the fact that the housing market has remained open.


3 Key events affecting the Housing Market in Q1

  • The availability of properties coming onto the market has slowed compared to this time last year, falling 12%
  • And with the end of the stamp duty holiday at the end of March
  • There is likely to be a brief slowdown as the race to complete existing purchases slows new business in the market temporarily

But will the housing market grind to a halt when the Stamp Duty holiday ends?

No. But we do expect a brief slowdown in transactions during Q2 as people race to complete existing purchases. A short extension to the stamp duty holiday could mitigate this slowdown.

Data published by Zoopla shows that the housing market performed strongly during 2020, with a 47% increase in 2019, defying expectations. However, average completion times have extended by around two weeks to just under four months, which is unsurprising considering the restrictions on movement throughout 2020 and early 2021.

Read Zoopla’s full report below…


UK house price growth close to four-year high reports Zoopla

Rising buyer appetite and the slow growth in the housing market number of homes for sale are driving up house prices, according to our latest House Price Index. By Annabel Dixon UK house prices… 

Read more

 


The housing market performed strongly during 2020, significantly higher than 2019, despite the movement restrictions and economic turmoil caused by the Coronavirus pandemic.

Despite the expected temporary slowdown in Q2 caused by the expected end of the stamp duty holiday, the indications for continuing strong growth remain extremely positive.

And the Governor of the Bank of England has indicated that he expects the economy to bounce back strongly, and this is a further encouraging sign that growth in the housing market will remain strong during 2021.


Demand for Properties Outstripping Supply as Housing Market Outpaces 2020 Performance

Read our latest media release

 


So what does this mean for mortgages?

There was a tightening of mortgages across the housing market during 2020. Lenders tightened their criteria, and many of the deals on offer dried up. In particular, the higher loan to value products that first-time buyers rely upon were withdrawn. Deals were still available, and mortgages agreed but at a lower rate. And yet despite that, the housing market performed above all expectations.

In 2021 lenders are expected to re-introduce some of the products that were withdrawn during 2020, in particular the 95% LTV products.

More info on this below…


 

Mortgage outlook for 2021: how it could affect you reports Zoopla

Whether you’re a first-time buyer, homeowner or landlord, we take a look at how mortgage trends could impact you in the months ahead. By Nicky Burridge First-time buyers First-ti…

Read more