Outlook for the Housing Market
Market Outlook for 2021
The tight market for family homes will limit further growth in sales volumes in the short-term. However supply will start to build as homeowners become increasingly comfortable opening their homes to viewings.
The scale of buyer demand will also moderate from the peaks seen after Easter as lockdowns end across the UK and households are able to return to some level of pre-pandemic ‘normality’, enjoying amenities with family and friends.
However, the supply/demand imbalance will remain. The ‘search for space’ among homeowners has further to run, especially as some office-based businesses are now confirming how their working practices will change in the longer-term. More flexible working arrangements open up new opportunities for homeowners to move to a different location. At the same time, the roll-out of the 95% mortgage guarantee and 5% deposits will mean more demand from first-time buyers.
UK annual house price growth was at 2.1% at the start of the first lockdown, and is now at 4% after peaking at 4.5% in January. Prices will continue to be underpinned by the ongoing demand/supply imbalance, with the strongest growth in the more affordable markets in the North and Midlands. The scale of price growth will slow in the coming months however, especially as we move towards Q3 (July To September) when the stamp duty holiday extension comes to an end and government support for the economy starts to be pulled back.