Zoopla predicts that the price strength that has been seen since the reopening of the housing market is likely to continue at least until the autumn.
Another two to three per cent on average is likely to be added to prices in the coming three months, it anticipates, and if there are to be price falls they will not be noticed until the tail end of the year.
New sales agreed, subject to contract, have grown the most in England where the market is open for business. The rebound in sales has been strongest in northern England led by Leeds, Sheffield and Manchester where sales are up to 20 per cent higher than in February this year, before the virus outbreak.
In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale. Zoopla says inventory in these cities is significantly lower than last year.
The number of homes for sale per estate agency branch is 15 per cent lower than a year ago and in some cases much worse - stock levels in Cambridge, for example, are up to 40 per cent lower year-on-year.
UK house price growth is up 2.4 per cent on the year, and has increased from 1.6 per cent at the start of 2020.
A basket of 20 cities measured by Zoopla shows slower growth in May, dropping to 2.1 per cent annually from 2.4 per cent recorded in April.
The city with the highest rate of house price growth over the past 12 months is Nottingham (up 4.3 per cent), followed by Manchester (3.9 per cent).
The latest house price snapshot from the portal’s research team suggests that after the initial rebound of recent weeks, demand will weaken over the summer months as the economic impact of Coronavirus starts to materialise.
Caution amongst lenders and more limited availability of 90 per cent loan to value mortgages will reduce demand, particularly amongst first time buyers.
The portal points out that last year a fifth of all homebuyers purchased a home with a deposit of 10 per cent or less.
“The rebound in housing market activity has taken many in the industry by surprise. It is welcome news given the projections for falling economic growth and rising unemployment. Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments” explains Richard Donnell, the portal’s director of research and insight.
“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown. House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens” he continues.
“While the average asking price for homes marked as sold on Zoopla are seven per cent higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years. We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at two per cent” adds Donnell.