"It has been a remarkable turnaround and completed sales look set to fall just 6% short of last year despite a two-month closure of the market in England."
Zoopla then anticipates a further demand spike in January 2021, as some buyers leave it late to enter the market in an attempt to beat the stamp duty deadline.
The first quarter of 2021 is expected to record a property uplift, with 100,000 additional sales expected to complete before the end of March.
The figures show that since its summer peak, demand for housing has weakened and has now fallen below pre-lockdown levels. Despite this dip, it remains 34% higher than this time last year. Demand recorded a sharp dip after the announcement of the latest national restrictions in England but it rebounded once the lockdown began.
Zoopla's data shows that new sales agreed are running 38% higher than a year ago, adding to the sizable pipeline of business that is set to complete in the first quarter of 2021. However, it predict that of the new sales that are agreed in January, just half are likely to beat the stamp duty deadline based on evidence from previous years.
Overall, completed sales are now expected to fall just 6% short of the levels seen in 2019.
The boost to demand and sales volumes has culminated in house price growth approaching an almost three-year high of 3.5%, up from 1.2% a year ago, with 2020 expected to end with house price inflation reaching 4%.
Once the stamp duty holiday concludes at the end of March, Zoopla anticipates a slowdown in sales completions. This will have a knock on effect on transaction volumes in the second quarter of the year, which it expects to run 20-30% below normal transaction levels as stamp duty is reintroduced, before recovering slightly and running 10% below 2019 levels for the second half of the year.
The influence of weakened demand in the wake of stamp duty is reflected in our house price inflation forecast for 2021, which Zoopla projects to end the year at 1%, down from 4% growth at the end of 2020.
It expects house price growth in 2021 to fall within a narrow range at a country and regional level, from 1.75% in Scotland to 0.5% in the East of England and the North East.
Richard Donnell, director of research and insight at Zoopla, commented: “It has been a roller coaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30% higher than this time last year. House price growth has hit a three-year high and is set to increase further in the short term.
“The high volume of sales agreed this autumn will spill over as completed sales in 2021 and this will support the overall number of sales completed in 2021 at 1.1 million. It has been a remarkable turnaround and completed sales look set to fall just 6% short of last year despite a two-month closure of the market in England.
“There are some challenges ahead as the country battles the impacts of the pandemic on the economy and day to day life. The impact on the housing market is less than in previous downturns as sales volumes have already fallen in recent years and affordability levels are far from over-stretched. We expect housing demand to slow further over 2021 and this will ease the upward pressure on prices which we expect to be 1% higher by December 2021. Lower sales volumes over the second half of 2021 and a growing scarcity of supply will offset weaker demand and support headline pricing levels.”
