With so much uncertainty around what the end of the stamp duty holiday means, we chat with Andy Marshall, Zoopla’s Chief Commercial Officer, to get the inside scoop on the trajectory for buyer demand, and why he believes the market won’t run out of steam.
Zoopla reports that 2021 is set to be one of the busiest sales markets in more than a decade. But as some buyers miss out on stamp duty savings and the economy starts to open back up, is the boom over?
Demand has fallen slightly from the highs of April but it’s important we contextualise this in terms of where we were before the pandemic and where we are now.
It’s clear from our latest House Price Index that the market still remains elevated. This is despite many buyers accepting they would miss the initial stamp duty deadline due to conveyancing delays and the longer timeframe required to complete a sale.
In fact, when we compare current levels to before the pandemic, buyer demand continues to run 55% above that recorded in 2019, while house price growth in many regions is at a ten year high.
And although the prospect of larger stamp duty savings was off the table for many homemovers as we hurtled towards June 30th, sales continued to move at pace throughout May, marking the fastest-moving housing market in at least five years.
This shows that those who were already in the conveyancing stage on properties over the £250,000 threshold continued to push on with sales, regardless of any changes to stamp duty relief.
That’s why we stand by our forecast that 2021 will be one of the busiest years for the housing market since the global financial crisis — with 1.5 million residential transactions set to take place.
This is great news for agents and we’re working closely with our customers to ensure they’re capitalising on the buoyant market.
So if the end of the initial stamp duty holiday hasn’t been a deterrent for new buyers to enter the market, what about the upcoming changes to Covid restrictions? Will the return to work stop people from moving?
As the full re-opening of the economy approaches, many companies will be giving office-based workers guidance on how they will operate when fully re-open.
And with many businesses now more accepting of flexible working, some workers will now have the certainty to move for additional space or to a different location — particularly if the daily commute is less of a consideration.
We believe the ‘search for space’ will continue to fuel buyer demand, as homeowners — typically with higher levels of equity and/or with families who have outgrown their space — have been prompted to change their lifestyle, and where they want to live.
It’s because of this that we’re confident that this once-in-a-lifetime ‘reassessment of home’ will continue to support sales activity through the latter part of 2021.
What do changes in the SDLT mean for first-time buyers and who can still benefit from the exemption?
It’s clear from the data that an increasing number of first-time buyers who thought owning their own home was out of their grasp, have been able to enter the market.
This is largely due to the fact many have used lockdown to save for a deposit, as well as the wide range of mortgages on offer to them, such as the new 5% deposit mortgage scheme.
We expect demand from first-time buyers to continue, as those eligible will still be able to benefit from stamp duty savings on the first £300,000 of their home purchase (on homes worth up to £500,000), regardless of any changes to SDLT beyond June or September.
It’s also important to remember that even though the stamp duty threshold has dropped from £500,000 to £250,000, we’re still seeing heightened market activity. This is particularly strong from buyers who are pushing to complete ahead of the final September deadline, in order to take advantage of savings of up to £2,500.
It’s clear from Zoopla’s data that the market is set to maintain momentum throughout the rest of 2021, but what’s next once the boom is all over?
We are in unprecedented times so it’s very difficult to predict what exactly is going to happen, but we firmly believe that the once-in-a-generation ‘reassessment of home’ has further to run.
And with the total stock of homes for sale continuing to run well below historical norms, the focus of our innovative ‘My Home’ experience has been to encourage would-be sellers to enter the market, in turn driving more leads to our agent partners.
42% of homeowners are considering putting their home on the market so our aim is to counter any fall in supply by nudging these inactive homeowners to consider selling. This in turn will provide a future base of sellers for agents to ensure they’re set up for success.
Agents interested in finding more about this can speak to our team.