Second Steppers Seeking Bigger Homes Drive House Prices Up

Home sales prices rebounded in September after a dip in the summer thanks to growing demand from those seeking larger homes, according to the new figures.

The median home sales price rose 0.7 per cent this month to £367,760, reversing a 1.3 per cent drop seen in August. On an annual basis, prices rose 8.7 percent.

The market remains “surprisingly resilient” and the stamp duty cuts announced in the mini-budget could spur more demand, and push prices higher, in coming months, according to Rightmove.

That comes despite the Chancellor failing to deliver a long-awaited full overhaul of stamp duty, instead doubling the threshold at which it is charged to £250,000, saving movers a maximum of £2,500.

Strong westerly winds: Wales, the South West and North West have seen the biggest increase in sales prices over the past year, according to Rightmove

Strong westerly winds: Wales, the South West and North West have seen the biggest increase in sales prices over the past year, according to Rightmove

On the rise: Median sales prices are up 0.7% this month after falling in August

On the rise: Median sales prices are up 0.7% this month after falling in August

On the rise: Median sales prices are up 0.7% this month after falling in August

Price growth this month was primarily driven by the “high-end and mid-range market sectors,” as demand for three- to four-bedroom homes rose 2 percent, even compared to the “frenzied market” in the last year.

Median sales prices for second stage homes rose 0.5 per cent in the month to a new record of £340,513.

“These numbers suggest that for those who can, climbing the ladder to a home with more space remains a priority, even at a time when personal finances are stretched,” said Rightmove director of property science Tim Bannister. .

On the other hand, demand from first-time buyers fell as affordability has become increasingly limited after sharp price increases in recent years and a growing cost-of-living crisis.

The average sale price of a starter home increased 0.2 per cent to £224,479, growing 7.4 per cent year on year.

The government has announced better stamp duty cuts for first-time buyers than for other homebuyers in a bid to ease the burden, but experts have warned it may have the opposite effect.

While many hoped for a full overhaul of stamp duty, the Chancellor opted simply to double the threshold at which people moving house are charged from £125,000 to £250,000, saving them up to £2,500 .

But the exemption for first-time buyers will increase from £300,000 to £425,000, which could save them much more. On a £425,000 house, a first-time buyer would save £6,250.

It means that two-thirds of homes are now exempt from stamp duty for first-time buyers in England, and a third of all homes are exempt for all buyers, according to Rightmove.

Stamp Duty Reduction Calculator: Calculate how much you would pay to move house

Mortgage rate increases have dramatically increased the cost of buying versus renting

Mortgage rate increases have dramatically increased the cost of buying versus renting

Mortgage rate increases have dramatically increased the cost of buying versus renting

The property’s website said the cutouts “may provide some support” for those trying to climb the housing ladder, but also they warned that they could stimulate more demand and push prices even higher.

“Demand has weakened in recent months, but Friday’s announcement is likely to stimulate demand a bit more,” Bannister said.

‘If it leads to a big jump in potential buyers competing for the limited number of properties for sale, then it could lead to some non-seasonal price increases in the coming months.

‘The change in first-time buyer threshold means we could see more first-time buyers who can afford it making the leap to a larger home as their first move.

“With more demand from buyers, we also expect the current trend of more properties coming to market to continue, providing more choice for buyers.”

Richard Davies, managing director of Chestertons, believes the stamp duty cuts “could see house-seekers who previously suspended their property search resume their activity”.

“If this additional demand is not met quickly, the tax cut could increase the existing imbalance between supply and demand, consequently leading to an initial increase in property prices,” he concluded.

Total buyer demand is down just 2% from the same period in 2021 and is still 20% higher compared to the five-year pre-pandemic average, according to Rightmove.

Meanwhile, supply has increased as the number of homes coming on the market jumped 16 percent this month, marking a return to 2019 levels.

London, which saw the steepest monthly price drop last month, saw the biggest price increase in September: 2.1 percent. Year-over-year, however, prices rose 6.9 percent, making the capital the slowest-growing region.

Prices fell in Wales and the West Midlands by 0.6% and 0.4% respectively in the month, although during the year they were some of the fastest growing regions.

Richard Freshwater, director of estate agents at Cheffins in Cambridge, said: “The property market has been driven by inadequate supply for decades, and while there have been reports of slowing demand, particularly for new build homes, we have seen that the main regional markets continue to prosper.’

Rising interest rates are causing some buyers to rush in and repair their mortgages before rates go higher, according to Matthew Thompson, head of sales at Chestertons.

“We are seeing an increasing number of home hunters who want to secure a property as soon as possible and get a fixed-rate mortgage,” he said.

“This has contributed to keeping the real estate market in September active and competitive.

“As the cost of living crisis looms, we are also seeing some buyers compromise on their priorities to secure a property below their initial budget.”

Rightmove's chart shows that while two borrowers could meet the average asking price of first-time home buyers with a mortgage, one individual can't.

Rightmove's chart shows that while two borrowers could meet the average asking price of first-time home buyers with a mortgage, one individual can't.

Rightmove’s chart shows that while two borrowers could meet the average asking price of first-time home buyers with a mortgage, one individual can’t.

The best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.

If you’re thinking of buying your first home, moving or remortgaging, or are a landlord buying to let, it’s important to get good independent mortgage advice from a broker who can help you find the best deal.

To help our readers find the best mortgage, This is Money has partnered with independent broker L&C.

Our mortgage calculator powered by L&C can allow you to filter offers to see which ones fit your home value and deposit level.

You can also compare different fixed-rate mortgage durations, from two-year fixes to five-year fixes to ten-year fixes, with total and monthly costs displayed.

Use the tool at the link below to compare the best deals, taking into account both fees and rates. You can also start an online application on your own time and save it as you go.

> Compare the best mortgage offers available now

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