Aspiring home buyers rushing to buy before the stamp duty holiday deadline are clogging the transaction pipeline, with 50 per cent more home sales than usual waiting to be completed, a report reveals.
Record high sales agreed post-lockdown has led to some 140,000 more homes currently progressing through the system than at this time last year, taking the total of unfinished transactions to 180,000, Zoopla said.
The property portal said sales agreed peaked in August, rising 62 per cent, and were up 40 to 60 per cent between July and October compared to the same period last year – but demand has now slowed back to pre-Covid levels of early March.
In demand: House sales were up 40 to 60% between July and October compared to last year
The high volume of business means it may take longer than the typical 100 days for transactions to complete – and prospective home buyers need to agree a sale before mid-December if they want to avoid missing out on a saving from the stamp duty holiday, Zoopla said.
Richard Donnell, research and insight director at Zoopla, said: ‘There is a large pipeline of sales to complete by Christmas and the 31 March 2020 – with an average 100 days to complete an agreed sale those looking to beat the stamp duty deadline need to agree a sale before mid-December.’
Potential buyers must not only weigh up the the maximum £15,000 saving from the stamp duty holiday against how much extra they will pay for a property in a seller’s market, but also whether they will get more for their home too to balance that out.
Zoopla’s own index shows that annual house price growth is running at 3 per cent this month, up from 1.1 per cent growth in October last year and the highest in two years and half.
Nottingham has seen the biggest rise of 5.1 per cent, while Cambridge the smallest of 0.9 per cent, while prices in Aberdeen fell 0.9 per cent.
‘House price growth continues to move higher as the weight of demand pushes the growth rate upwards and we expect prices to be 4 per cent higher by the end of 2020,’ Donnell said.
Clogging the pipeline: House sales agreed peaked in August, rising 62%
However, Zoopla said the overall picture of strength is masking a slowdown in sales in parts of the country inhabited by households with lower incomes, who are more likely to suffer because of the current crisis.
‘Growing economic uncertainty and reduced credit availability mean a relative decline in the share of new sales being recorded in less wealthy demographics where households are more sensitive to changes in the economic outlook and the availability, pricing and terms for credit,’ Zoopla said.
‘In contrast we have seen an increase in new sales in areas with wealthier demographics where home-owners have been less directly impacted by the recession so far.’
Zoopla said the overall picture of strength is masking a slowdown in sales in parts of the country inhabited by households with lower incomes
Sales agreed since September in areas with wealthier demographics areas jumped 19 per cent, while they fell 13 per cent among the ‘financially stretched’.
Zoopla said this market polarisation is set to become a growing trend next year when unemployment is set to rise further.
And those who can afford to move to larger properties in the country are an even bigger driver of the market mini-boom than the stamp duty holiday, according to the portal.
‘We believe that the “once in a lifetime re-evaluation of housing”, in response to COVID, has been a greater underlying driver of demand with stamp duty savings more of an “added bonus” from completing a sale before next April’, Zoopla said.
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That’s probably why London has seen the biggest jump in homes coming onto the market, up 39 per cent compared to this time last year, while the North East and North West have seen slower growth in supply.
The South East and London are seeing the biggest rise in sales, up 15 per cent and 12 per cent in the year so far, compared to the national average of just 3 per cent – although that’s because those regions are recovering from a low base.
Nick Leeming, chairman of Jackson-Stops estate agents, said: ‘Whilst there has been a notable uptick in activity across every branch, this has been particularly prevalent in the South East, with Chichester and Dorking featuring amongst the locations which saw the highest volume of new offers on properties.’
Price rises everywhere: Zoopla’s index shows that annual house price growth is running at 3% this month, up from 1.1% growth in October last year and the highest in two years and half