Strong demand from affluent home movers has boosted the total value of sales agreed by 26% in 2020 compared to the previous year.
There has been a shift in the demographic profile with more sales from home movers in affluent areas with higher house prices boosting the total value of sales in 2020, according to the Zoopla House Price Index.
More sales are from older, equity rich and long-term homeowners with higher house prices increasing the value of sales agreed by 26% or £62 billion compared to 2019 taking the annual total value to £300 billion.
October rebounded with the value of mortgage approvals up 68% and with higher property values in the East of England and South East total values are 37% up compared to last year.
There are fewer first time buyers as mortgage lenders require larger deposits of 15% and higher due to the economic uncertainty resulting from the Covid pandemic.
House prices rise during 2020
Annual UK house price growth was 3.9% for November 2020 compared to 1.3% for the same period a year ago.
This table from Zoopla shows the change in average house price for the year from June to November 2020.
| Month | Average price | 3-month % |
Annual % |
|---|---|---|---|
| Jun-2020 | £217,500 | 0.3% | 2.2% |
| Jul-2020 | £218,800 | 0.7% | 2.5% |
| Aug-2020 | £220,400 | 1.1% | 3.2% |
| Sep-2020 | £221,900 | 2.0% | 3.7% |
| Oct-2020 | £221,800 | 1.4% | 3.4% |
| Nov-2020 | £222,900 | 1.1% | 3.9% |
The highest 3-month change in house prices is 2.0% for September and this has slowed in the last two months and Zoopla projects this will reach 5.0% for the year.
For remortgage buyers this higher house prices gives them the opportunity to release capital when moving to a new preferential rate to make home improvements such as a new kitchen or bathroom.
House price growth is mainly being driven by northern England with an average rise of 5.0% in the North West, 4.9% in Wales and Yorkshire & Humber.
There are strong rises in house prices for cities outside of the South East such as Manchester up 5.7% year-on-year to November, Leeds higher by 5.6%, Nottingham up 5.4% and Liverpool higher by 5.3%.
More demand for houses than flats
Buyers searching for houses have increased house prices by 4.3% during the year, more than double the rate for flats rising by 1.8% according to Zoopla.
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This is due to the change in priority with more households working from home requiring more space such as an extra room for an office or with a garden and parking.
A survey by Zoopla shows that 44% of home movers are not influenced by the government’s stamp duty holiday and are focused on more space and better location.
The changing priority for households means buy-to-let investors may need to focus on property with more indoor and outdoor space to achieve higher rental incomes and yields.
For older homeowners living in a house rather than flat the strong rise in property values means the equity release buyer can access cash using a lifetime mortgage to spend on anything such as home and garden improvements.
Wealthy home movers are expected to have a higher share of sales agreed along with more first time buyers as lenders accept higher loan to values offering a strong start to 2021.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Learn more by using the mortgage monthly cost calculators, equity release calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
Equity release buyers can use the lifetime mortgage quote and our London City Mortgage adviser can recommend the best products allowing you to receive cash from your property to help maintain your standard of living as costs rise.
