Sales agreed for properties priced between £100,000 and £150,000 has increased by 26% from the last quarter of 2020
First-time buyer (FTB) demand is 5% higher since January, according to the Zoopla House Price Index.
Despite the rise in buyer demand, the market share of first-time buyer sales hit its lowest level since 2016 last year, accounting for 31% of sales which was down from 35%.
Older homeowners have boosted cash purchases to nearly a third (30%) of all sales, reaching a 12-year high.
Sales agreed for properties priced between £100,000 and £150,000, a sector of the market where first-time buyers are typically more active, has increased by 26% from the last quarter of 2020.
Housing demand remains elevated in the wider market, up 12.4% on this time last year.
The number of sales agreed also rose 10.1% year-on-year (YOY), however the total quantity of stock fell 13.8% compared to 12 months prior.
Meanwhile, sellers are reluctant to list homes for sale while the third lockdown continues, maintaining upward pressure on prices which have risen 4.3% annually.
Ahead of the Budget on 3 March, Zoopla believes there is evidence that landlords are looking to take gains ahead of possible reforms to Capital Gains Tax, as well as changing rental market dynamics.
The possibility of an extension to the stamp duty holiday continues to rise, after reports of a potential three month extension.
Zoopla noted that while 750,000 homemovers should benefit from full or partial SDLT relief, 70,000 sales are expected to miss out due to the extended time it is taking to process transactions if the deadline ends as scheduled, on 31 March.
Gráinne Gilmore, head of research, Zoopla, said: The strong bounce in demand seen at the start of the year has been further boosted by increased numbers of first-time buyers active in the market. Many of these buyers will be taking advantage of the increased number of home loans now available for purchasers with smaller deposits, and most will be less concerned about the ending of the stamp duty holiday on 31 March.
First-time buyers have no property to sell, so their increased activity in the market is further pushing up buyer demand ahead of supply. As the growth in demand continues to outstrip the supply of homes, it puts more upwards pressure on prices, Gilmore said.
Nigel Purves, chief executive of Wayhome, added: Although we entered the new year in a third national lockdown, December’s positive momentum has rolled into 2021 as would-be buyers rush to beat the stamp duty deadline. We’ve seen priorities shift as individuals look for larger homes with additional space.
Purves said, the government’s roadmap suggests working from home is set to become the norm for many industries for at least the next six months, so that trend is likely to continue. All eyes are now on the Budget to see the financial ramifications for consumers and businesses alike.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.