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Summary
• Sales completions forecast to reach 1.5 million this year, up from 1.04 million last year and the highest level since 2007
• The value of sales in 2021 is forecast to be £461 billion, up 68% from 2019 amid a rise in higher value homes exchanging
• Total stock of homes for sale remains constrained, down 20.8% in the year to mid-May compared to the average last year
• Annual house price growth is at 4.1%, up from 2.3% a year ago
• On a regional basis, the largest price growth is in Wales, at 6.3% and Yorkshire & the Humber at 5.4%
• Price growth in London is at 1.9%, the lowest level since March last year
House Price Index – Country, region and city summary
Annual UK house price inflation at +4.1%
Average house prices rose at 4.1% in the year to April, up from 2.3% in April last year, but down from 4.7% at the start of the year. Prices are being underpinned by demand from buyers continuing to outstrip supply. Price growth is highest in areas where affordability is greatest.
In the year to April, average prices in Wales rose by 6.3%, followed by Yorkshire & the Humber where prices rose by 5.4%. London continues to trail when it comes to price growth, at 1.9%, the slowest regional rate of growth across the UK for the sixth consecutive month.
On a city level, Liverpool (+6.9%) and Manchester (+6.8%) are registering the highest price growth of major cities monitored in this report (see map on page 6), the fifth consecutive months this has been the case. This level of price growth comes as buyer demand in these cities in April was running at twice the levels than in more ‘normal’ market conditions between 2017 and 2019, amid a 10+% decline in the homes available to buy. Across the UK, the demand for family houses continues to put upwards pressure on this type of home, with average values for houses up +5.2% on the year, compared to +1.1% growth for flats.
Sales completions forecast to rise to 1.5 million
Buyer demand has been strong since the end of the first lockdown last year as households reassess how and where they are living. For some, the need for more space, especially if working from home is to be a more regular occurrence, has prompted a move. Many older households are also re-evaluating their housing needs and moving for the first time in many years. First-time buyers are also becoming more active in the market, with better access to mortgage finance.
The stamp duty holiday introduced in July to March, and the subsequent extension to June and tapered extension to the end of September, has provided an added impetus for many to purchase a home.
This demand for homes in the sales market led to a very busy start to the year (as examined in March house price index report) with £149 billion of homes sold subject to contract in the first 15 weeks of the year. We expect that activity will remain elevated in H2, albeit not as high as towards the end of last year. Even so, we expect total sales completions this year will be 1.52 million. This would mark 2021 as the one of the most active sales markets since the global financial crisis, and as one of the top ten busiest years since 1959.
Our projections also show that the value of homes sold this year will be £461 billion, some 46% higher than last year, and 68% higher than in 2019. Since the market opened up last year, the ‘search for space’ has contributed a rise in the value of homes being sold. This, as well as added activity, has led to a rise in the total value of sales from £273 billion in 2019, to £316 billion in 2020 and a projected total of £461 billion in 2021 – boosting revenue pools for agents. In turn, the value of mortgage lending is also rising, hitting a record high of £11.3 billion in March, according to the Bank of England.