House sellers have continued to raise their asking prices despite borrowers facing higher interest rates and the cost-of-living squeeze, data from the property portal shows.
Price growth was concentrated in the middle and high-end market sectors, as homeowners looked to move up the property ladder. Prices in the so-called “second stepper” category – three-bedroom homes and non-detached four-bedroom properties – reached a new record average asking price of £340,513.
Buyer demand in these sectors is up by 2% even compared to the frenetic market of last year, while more choice is now also available compared with 2021.
These numbers suggest that for those who can, moving up the ladder to a home with more space remains a priority, even at a time when personal finances are stretched.
Tim Bannister, Rightmove’s housing expert, said the UK market remains “surprisingly resilient” despite growing economic pressures.
“The end of the summer break and the start of the new school term is usually a time when we see renewed focus from buyers, as those with plans to move see an autumn window of opportunity ahead of them.
Prices are likely to remain strong while demand continues to outweigh supply. However, it is as important as ever to price competitively, especially in the sectors where there is now more choice, as there is a fine line between a realistically priced home and a home that feels overpriced when many buyers are making every pound count.”
Last week’s rise in UK interest rates, to 2.25%, will increase the financial burden on borrowers. Rightmove reports that new first-time buyers are paying average monthly mortgage payments of £1,057, which will increase to £1,114 a month if lenders pass on the latest 0.5% interest rate rise.
Last week’s stamp duty changes from the chancellor, Kwasi Kwarteng, could give property prices another boost, at least in the short term, providing some support to first-time buyers.
These factors combined have perhaps contributed to demand in the first-time buyer sector being down by 8% on the same period last year, though to put this into context, demand for first-time buyer type properties is still up by 27% compared with the five-year pre-pandemic average between 2015 and 2019.
Tim Bannister asserts while demand has been softening over the past few months, Friday’s announcement is likely to stimulate some more demand. He said: “If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale then it could lead to some unseasonal price rises over the next few months.
“But because the change is permanent, and because of gathering headwinds such as rising mortgage rates, we expect to see a more gradual increase in demand compared with the surge when the temporary stamp duty holiday was announced in 2020.”
He said more first-time buyers who can afford it may make a jump to a bigger home as their first move. He added: “With more buyer demand we would also expect that the current trend of more properties coming to market will continue, offering more choice for buyers.”
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