One in 16 homes in the UK is expected to have changed hands by the end of next month, making 2021 the busiest year for the housing market since 2007.
Increased buyer demand, 19 per cent higher than the five-year average, coupled with a modest supply of homes to buy, 42 per cent lower than usual, has pushed up prices by almost 7 per cent in the past year, according to Zoopla.
The property agent puts the average house price at £240,000. Growth has been steepest in Wales, where prices have risen by 10.8 per cent, and northwest England, where they are up 9 per cent. In London they have risen by 2.3 per cent.
The market has been fuelled by a combination of lockdown-induced lifestyle changes and cheap mortgages. The desire for a home office and garden has pushed house prices specifically up 8.3 per cent in the past year. Flats have risen in value by only 1.2 per cent.
The number of houses for sale is less than half that of historical levels, according to Zoopla, and the stock of flats to buy is down 15 per cent.
The trends have meant that the value of property changing hands has surpassed £500 billion in the past year for the first time, according to separate research by the real estate company Savills. “The dramatic increase . . . reflects the unusual coming together of three key factors: the so-called race for space as people looked to trade up the housing ladder, the cheap cost of mortgage finance and the added impetus of a stamp duty holiday,” Lucian Cook, head of residential research at Savills, said.
Cook’s report shows that the property market has been fuelled by home buyers with cash or equity to spend: this group accounted for 56 per cent of the total expenditure. Movers with mortgages accounted for 25 per cent, first-time buyers with mortgages 15 per cent and buy-to-let investors with mortgages only 4 per cent.
The most money, £108.6 billion, changed hands in southeast England — a 62 per cent rise on the previous year. There was a 60 per cent increase in the southwest and 57 per cent rise in the east of England. In total £512.6 billion changed hands between October last year and October this year.
However, estate agents have warned that this level of activity is “unsustainable”, with each estate agency office left with an average of just 21 properties for sale, a record low, for an average of 511 registered house hunters in October.
The dearth of supply is being exacerbated by the slow pace of homebuilding. In a paper published today by Andrew Wishart, property economist at the consultancy Capital Economics, said: “When the current difficulties sourcing materials eventually ease, the end of the Help to Buy equity loan scheme [in March 2023] and cooling transactions will prevent a resurgence in house building . . . as a result newbuild construction is likely to ease from a peak of 219,000 homes in 2019-20 to about 190,000 in 2023-24.”