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Race for space is driving surge in demand for houses

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Housing demand is now 80 per cent higher than at the same time of year for each of the last four years, property portal Zoopla has reported.

Its monthly House Price Index shows that despite the high demand, house prices are up by ‘only’ 4.1 per cent on last year. Although higher than the 1.8 per cent growth in the same period of 2020, they have been held back by constraints in the number of sales agreed, which are up 5.3 per cent on the year.

This figure reflects a fall of 13 per cent in the number of homes available for sale although the number is expected to rise ‘as the Covid vaccination programme continues to gather pace and the Prime Minister’s roadmap out of lockdown comes into effect’, said Zoopla.

Not surprisingly, the time taken to sell a property has come down. Outside of London it now takes 44 days to sell. This compares to 50 days in 2020. In London, however, properties are taking slightly longer than previously to sell.

The pandemic is continuing to polarise demand for property, with the ‘race for space’ meaning houses are now selling three weeks faster than flats.

Demand for three-bed homes jumped by 30 per cent in the week after the Budget; ‘these family homes are still the most coveted type of property across the UK’, said Zoopla.

‘The search for space is driving continued demand for family homes, which means prices for houses are rising faster than flats, and houses are also selling more quickly’, commented Zoopla head of research Gráinne Gilmore.

‘The prospects for the housing market over the next year have improved on the back of the Budget. The continued search for space, the stamp duty extension and mortgage guarantees, will all support activity level and headline house price growth up to the end of the second quarter of 2021. 

 “Yet the pathway out of the lockdown, and the route to a full re-opening of the economy and unwinding of support measures, is unlikely to be simple or smooth.

‘We still expect house price growth to moderate later in the year, but overall transactions are set to benefit from an additional boost following the stamp duty extension and tapering’.