Post-budget spike in demand for homes

The Chancellor’s announcement of a stamp duty holiday extension and 95% mortgage guarantees created a 24% spike in buyer demand in England in the days following the Budget, as more first-time buyers and movers entered the market.

The largest post-budget bounce was for three-bed houses according to the latest UK House Price Index from Zoopla. However, there was a noticeable spike in demand for one and two-bedroom flats in London and the South East after the Chancellor’s announcements, signalling increased buying intent among first-time buyers and those looking to take advantage of the tapered stamp duty holiday.

While there was a slight post-budget rise in supply, overall supply levels remain deeply constrained, with total supply this year down 13% vs the 2020 average. As lockdowns ease and vaccinations continue to be rolled out, pent-up supply is expected as vendors feel more comfortable opening their homes for viewing, albeit with the usual seasonal Easter dip.

Increasing activity levels among first-time buyers, especially as they take advantage of more 95% mortgages from April 1st, will keep pressure on the demand/supply imbalance however, as these buyers have no properties to sell. Annual UK house price inflation +4.1% UK house prices climbed by 0.5% in between December and February, taking the annual rate of growth to 4.1%. This is down from 4.4% growth in January, but marks the fourth consecutive month price growth has been above 4%, matching levels last seen in summer 2017.

Price growth ranges from 5.7% in Wales and 5.3% in the North West of England, to London, trailing with 2.3% growth.