June House Price Index 2021: Our Analysis

We’re into July already and both Rightmove and Zoopla have published their June House Price Index. But first a quick look back at housing marketing performance in May. House prices continued to rise at an unprecedented rate due to the combination of the Stamp Duty Holiday, rising demand, and lack of supply. Experts were split on how the market would perform over the Summer and into Autumn, with concerns over the market overheating. Other experts claimed that the end of the Stamp Duty holiday would take the heat out of the market and have a calming effect. 

June House Price Index Review

We took the view that the market would slow slightly, and as other Government support and restrictions begin to ease, supply would improve, and house price increases calm.

Looking forward to June, house prices continue to increase, with growth reported between 0.8% – 4.7%. The higher figure is reported by Zoopla, and is compared to a 2.2% increase in the same period in 2020. Rightmove reports that June’s house price growth is the highest since 2015, although at 0.8% is far more modest than Zoopla’s figures.

Homebuyers continue to search for homes that offer more space, including home offices, rural areas with access to the cities. Properties that offer the opportunity to make lifestyle choices remain highly sought after. 

Continued house price growth also means that 1.8 million homes have moved into a higher Stamp Duty band.

Taking a look at Rightmove’s June House Price Index, the picture is similar, although the figures are lower. They report a buoyant market, with demand continuing to outstrip demand, and performance versus the same period last year showing continued growth at a pace. 

However, Rightmove reports sales agreed in May at 17% ahead of the same period in 2019*, compared to 45% in April. And the price of property coming to the market continues to slow from 2.1% in April, 1.8% in May, and 0.8% in June. These figures indicate that the fast pace of the housing market is beginning to slow. Under normal circumstances, a slowdown could raise alarm bells, but in this case, it could provide time for the market to rebalance. In particular, the supply and demand issue where lack of available properties is driving house price increases.

June House Price Index
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June House Price Index Insights

Both Rightmove and Zoopla report that buyer demand remains very strong compared with the 2017-2019 period, although it is beginning to slow.  Activity is increasing among first-time buyers who are beginning to be able to access a broader range of mortgages and the Help to Buy scheme. The Stamp Duty Holiday will still apply to properties up to £300,000 so this market continues to attract Government support. 

Buyers seeking larger properties- over £500,000 – are driving price inflation in some rural areas as they seek properties that will provide changes including working from home and a more rural lifestyle. They are selling their properties in the cities and are able to buy larger properties. Inevitably this increases competition and drives house prices up. 

Finally, as the economy re-opens businesses are able to provide more substantive guidance to employees on how they will run going forward. Reports suggest that many businesses are moving towards more flexible working arrangements permanently, so employees are now able to make decisions on where and how they want to live including location, commuting time, type, and size of home.

*2019 is considered to be the most recent “normal” trading period for comparison.

Download the full June House Price Index from Zoopla here 

Review the full June House Price Indexfrom Rightmove here 

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