"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."
Six weeks on from the English market reopening, sales agreed are 4% higher than pre-Covid levels, despite prolonged market closures in Scotland, Wales and Northern Ireland.
Zoopla says elevated levels of demand and less available supply of homes for sale, which are 15% lower than a year ago, is creating an upward pressure on house prices, with June's asking prices up 7% year-on-year.
Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla says will cause UK house price growth to remain in the +2% to +3% range over the next quarter, with downward pressure on prices materialising later in 2020.
Zoopla expects the rebound in activity expected to subside in coming weeks, due to low product availability at 90% LTV and above, but says the reopening of Welsh and Scottish markets will support near term demand.
Richard Donnell, director of research and insight at Zoopla, 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%.
“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”
