Zoopla has predicted that UK house price growth will remain in the +2% to +3% range over the next quarter, with downward pressure on prices materialising later in 2020.
It said that after an initial rebound, we expect demand to weaken over the summer months as the economic impact of COVID starts to materialise.
Zoopla said caution amongst lenders and more limited availability of 90% loan-to-value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who – over recent years – have been the engine of the housing market.
Richard Donnell, director of research & insight, said: “The rebound in housing market activity has taken many in the industry by surprise. It is welcome news given the projections for falling economic growth and rising unemployment. Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.
“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown. House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.
“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years. We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.