Housing market sees post-Budget spike in demand

Budget measures designed to boost the housing market caused the number of buyers searching for property to rise by 24% in the days following the announcement, according to property website Zoopla.

In its latest monthly housing market update, Zoopla, said the demand for homes was now 13% higher in the year to date than a year ago, while supply remained “deeply constrained”. This dynamic is likely to push up prices.

The spike in demand followed the Budget on 3 March in which chancellor Rishi Sunak introduced a new mortgage guarantee scheme and extended the current stamp duty holiday for properties below £500,000 in value until the end of June. Those under £250,000 will be duty free until the end of September.

Zoopla said the measures created a 24% increase in buyer demand in England and Northern Ireland in the days following the Budget, as more first-time buyers came in to the market. Demand to buy homes so far this year is 80% above the four year-average.

Sales were up by 5.3% in the year to date, even taking into consideration the buoyant pre-pandemic period in 2020, while the flow of new supply into the market is down by 12.9% so far in 2021, the report said.

Zoopla said that house prices rose by 0.5 percentage points in the three months to February – prior to the Budget measures – down from 0.9 percentage points in the three months to January. This marked the fourth consecutive month in which year-on-year rises were above 4%.

The firm also reported a growing gap between demand for homes and demand for apartments, with houses having risen by 4.9% in value in the last year, while flats are up just 1.9%. The average number of days to agree the sale of a house has dropped to just 42, 20 days quicker than for flats.

Gráinne Gilmore, head of research at Zoopla, said the prospects for the housing market over the next year had improved on the back of Budget, but that nevertheless the firm was predicting growth in prices of just 1% in 2021. She said the route out of current lockdown measures was “unlikely to be simple or smooth”.

“The search for space is driving continued demand for family homes,” Gilmore said, “which means prices for houses are rising faster than flats, and houses are also selling more quickly.

“The continued search for space, the stamp duty extension and mortgage guarantees will support activity levels and headline house price growth up to the end of Q2 2021.

“We still expect house price growth to moderate later in the year, but overall transactions are set to benefit from an additional boost following the stamp duty extension and tapering.”