Housing market set to reach highest level of sales in 14 years
This year is expected to record the highest level of housing sales since 2007 with a forecast of 1.5 million completions.
According to Zoopla’s house price index for September, the value of new sales agreed will also reach a record £473bn, a £95bn uplift on last year.
The company said although sales would slow in 2022, there were no signs of a cliff edge ahead.
Housing demand has been running 25 to 30 per cent above the five-year average since this summer, and Zoopla said this would sustain next year’s activity.
It said a scarcity of properties would uphold property prices but purchases would still be relatively affordable even if mortgage rates go up.
Zoopla said: “Our projections assume mortgage rates will reach three per cent by the end of 2022 – the highest level since 2015 but still low by historical standards.”
The impact of the pandemic will continue to influence the housing market. In particular, sellers will be inclined to list their homes because of the financial gains in the values of their homes over the course of this year.
Changes in working habits and a desire for more space will also continue to influence sales. However, the report said higher inflation and increased living costs could impact buying power.
Zoopla said there were already indications of a slowdown in activity due to the changing mix of buyers.
“In the immediate aftermath of the first lockdown in 2020, it was wealthier owners in high value homes that were moving. In 2021 mortgage availability has improved and more first-time buyers are returning, and the mix of movers is now returning to more normal levels.
“This is resulting in much slower growth in the value of homes where new sales are being agreed, and points to a slowdown in price growth ahead,” Zoopla added.
Overall, sales are expected to reach 1.2 million in 2022, a 20 per cent drop on this year. This will still be high compared to sales volumes over the last decade.
House prices will also increase by three per cent annually in 2022, a slowdown from the six per cent growth seen this year, Zoopla predicted.
Richard Donnell, research and insight director at Zoopla, said: “2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500bn of home sales. The impact of the pandemic on the housing market has further to run but at a less frenetic pace.
“We expect the momentum in the market to outweigh some emerging headwinds from higher living costs and the risk of higher mortgage rates.”
House prices up 6.6 per cent
For September, annual house prices rose 6.6 per cent to £236,900.
London reported the lowest yearly inflation with a 2.3 per cent increase to £495,200 while Liverpool recorded the sharpest rise at 10.4 per cent to £139,300.
Based on Zoopla’s 20 city index, Aberdeen was the only city to report a decline in house prices with a 0.3 per cent drop to £143,100.