"Mass-market homes, catering for first-time buyers and second-steppers, have reached new price records, according to Rightmove's latest data - but price increases as the upper end of the market have slowed down."
Typically, August sees a slowdown in activity and lessening of price pressure, and although the Rightmove figures show the first overall monthly fall in the average price of property coming to market so far in 2021, this is predominantly due to a cooling at the higher end of the market. The average price of property coming to market falls by 0.3% (-£1,076) this month, driven by a 0.8% drop in the upper-end typically four-bedroom-plus sector.
However, there are new record price highs in the mass-market sectors made up of two-bedroom and fewer first-time-buyer-type properties, up by £1,328 (+0.6%) and three to four-bedroom second-stepper-type properties, up by £975 (+0.3%), where activity remains very strong. These lower-priced sectors are much less affected by the withdrawal of most stamp duty incentives and may have housing higher up their summer agenda than usual as more are holidaying closer to home.
Tim Bannister, Rightmove’s Director of Property Data comments:
“New sellers dropping their asking prices can ring economy alarm bells, especially when it’s the first time so far this year, so it’s important to dig underneath the headline figures. Firstly, we are in the holiday season which means that sellers have traditionally tempted distracted buyers with lower prices, though that might well be less applicable this year with many buyers having to stay a lot closer to home. Indeed, our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives.
"The mass-market of properties that cater for first-time buyers and second-steppers is still seeing high demand and upwards price pressure leading to new record high average prices in those sectors. In England there remains a smaller stamp duty saving of up to £2,500, though the window to take advantage of this saving by buying now and completing by the end of September is pretty much closed.”
Buyer demand remains strong despite the relative summer pause, and Rightmove predicts that there will be an autumn bounce in both seller activity and prices. In the first week of August, individual buyer enquiries to agents are up by 56% on the same period in the pre-Covid year of 2019, and down by just 17% on the frenzied post-lockdown 2020 numbers. This snapshot also shows that the number of sales agreed is up by 9% on the same period in 2019. Available stocks for sale still at record lows, with buyer demand hoovering up new supply leading to more properties selling, and selling more quickly.
Rightmove’s analysis shows that the likelihood of sellers finding a buyer remains at, or close to, an all-time high. The average time for a newly listed property to be marked sold subject to contract is the quickest ever at 36 days, which is a whole month faster than in February 2020, which was the last month before the first lockdown. However, given the fierce competition there is a high risk of losing out to another buyer who is in a better position to proceed and, as a result, many sellers are choosing to have a buyer lined up subject to contract before entering the race to secure their own purchase.
Bannister says:
“Sell before you buy is a successful tactic in fast-moving markets, especially the current one where any new listings popular in both specification and location are selling in days rather than weeks. Your own buyer will have to show a degree of patience while you wait for the right property to come to market, though the pedestrian speed of the normal legal process often creates the opportunity to play catch-up later if it takes a few weeks to find the right property. Some sellers are even completing their sale and going into intermediate rented accommodation and then buying, though this takes extra resolve and time."
Managing Director of Barrows and Forrester, James Forrester, comments:
“While the stamp duty holiday certainly lit the touchpaper it’s no longer fuelling the current house market boom with buoyant home seller sentiment and a lack of available properties driving house prices ever higher.
"A cool in the rate of growth at the top end of the market for larger homes is also to be expected. Not only were homes of this description seeing the largest saving as a result of the stamp duty holiday, but we’ve seen lockdown restrictions spur many buyers to buy bigger. As a result, demand for these properties has been through the roof and so this cool in asking prices is no doubt signs that this trend is starting to ease.”
