Increased home working and a desire for more space has led to a shift in demand and driven a rush to buy, pushing housing activity up by 40 per cent year-on-year, according to Zoopla, and driven mortgage demand to the highest level in a decade.
Russell Galley, managing director at Halifax said: “While the economy should begin to recover in 2021, helped by the roll-out of Covid vaccines, the jobs market will inevitably adjust to the changes in demand that are occurring, and unemployment is expected to rise. With the stamp duty holiday also due to expire in March – and lower levels of demand – housing market activity is likely to slow.”
However, Galley said that ‘unprecedented government support for furloughed workers and the self-employed has prevented a sharp fall in earnings for many households and that those hit financially hardest by Covid – the young and the lower paid – are less active in the housing market.
Galley added that this meant the summer surge was likely to be replaced by price falls but added that forecasting uncertainty was also higher.
“It is also important to note that such a fall would only partially reverse the almost £18,000, or 7.6 per cent increase in average prices experienced over the past 12 months.”
He said: “The key long-term issue for the housing market remains the inequality between generations and across the income spectrum, and specifically the ability of the young and lower-paid to access good quality housing that meets their needs. The impact on the economy of Covid will therefore only increase the need to prioritise improved housing availability and affordability.”