The average price of property coming to market reached another all-time high this month, up by £3,843 or 1.3 per cent to a new record of £307,033.
Online property portal Rightmove’s monthly index revealed this increase was driven by second-stepper and top of the ladder sectors, while smaller properties in the first-time buyer and buy-to-let sector saw a monthly price drop of 1.4 per cent.
The chancellor’s autumn statement announcement of the April buy-to-let stamp duty deadline created momentum and an early impetus to the bottom of the market, which also had the knock-on effect of energising the higher sectors of the market, according to Rightmove’s director Miles Shipside.
He said “Chains need a buyer at the bottom to enable everyone to move, and that was boosted by investors looking to avoid the 3 per cent levy introduced on 1 April.”
The bottom sector of the market with two bedrooms or fewer has in recent years seen high demand from both first-time buyers and buy-to-let investors, creating upwards price pressure, but as the demand boost from those looking to complete before the deadline has now dissipated, there was a drop-off in sale price in this typical first-time-buyer and investor sector.
“However, the momentum it created looks to have enabled owner-occupiers of these properties to trade up,” said Mr Shipside. “This has built an onward chain reaction of higher demand in higher price brackets as more people can move.”
Upwards price pressure has moved into the typical second-stepper sector (three or four bedrooms excluding four bedroom detached properties) with prices up by 0.6 per cent (£1,512) this month.
The ‘top of the ladder’ sector (four bedroom detached and five bedrooms or more) has seen the biggest increase this month, up by 1.9 per cent (£9,970) although their annual rate of increase remains the least at 5.1 per cent.
Mr Shipside observed while some felt there would be a stampede of existing landlords selling to other landlords, these figures indicate many of those who sold during the buy-to-let rush were actually first-time sellers looking to trade up.
He said: “They used the heightened demand from investors competing fiercely with first-time buyers to springboard themselves onto the next rung of the housing ladder.”
Jeremy Duncombe, director of the Legal & General Mortgage Club, warned year-on-year prices remained on their upwards trajectory above inflation. “As a result, affordability is a lingering concern, particularly in areas such as London and the south east.
“If we want to ensure large swathes of the public are not priced out of the market, construction companies will need to take advantage of the various government initiatives on offer in order to increase supply and help ease house price inflation in future years.”