Home sales prices rebounded in September after a dip in the summer on rising demand from larger home seekers, according to new figures.
The median sale price of a house rose 0.7 percent this month to £367,760, reversing a 1.3 percent 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 stimulate higher demand, and drive prices higher, in the coming months, according to Rightmove.
That comes despite the Chancellor’s failure to deliver a long-awaited full overhaul of stamp duty, and instead doubled 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
On the rise: Median sales prices rose 0.7% this month after falling in August
Price growth this month was driven primarily by the “midrange and upper-end markets,” as demand for three- to four-bedroom homes rose 2 percent, even compared to the “frantic market” of the last year.
Median sales prices for second stage homes rose 0.5 per cent on 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 the growing cost-of-living crisis.
The median sales price of a starting home rose 0.2 percent to £224,479, growing 7.4 percent year-over-year.
The government announced better stamp duty cuts for first-time buyers than other homebuyers in a bid to ease the burden, but experts have warned it may have the opposite effect.
While many had hoped for a comprehensive stamp duty reform, 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 hikes have dramatically increased the cost of buying versus renting
The property’s website said the cuts “may provide some support” for those trying to climb the housing ladder, but also they warned that they could stimulate higher demand and push prices up further.
“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 unseasonal price increases in the coming months.
‘The change in the 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 the market to continue, offering more choice for buyers.”
Richard Davies, managing director of Chestertons, believes the stamp duty cuts “could prompt house hunters who previously called off their property search to resume business.”
“If this additional demand is not met quickly, the tax cut could increase the existing imbalance between supply and demand, which would consequently lead 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 average before the pandemic, according to Rightmove.
Meanwhile, supply has increased as the number of homes coming on the market increased 16 percent this month, marking a return to 2019 levels.
London, which saw the steepest monthly price decline last month, saw the biggest price rise in September: 2.1 percent. However, year-over-year, 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 they were some of the fastest growing regions for the year.
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 a slowdown in demand, particularly for new build homes, we have seen that the main regional markets continue to prosper.’
Rising interest rates are prompting some buyers to rush and repair their mortgages before rates rise further, according to Matthew Thompson, Chestertons’ head of sales.
“We’re 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 the property market in September remaining active and competitive.
“As the cost of living crisis looms, we are also witnessing some buyers compromising on their priorities to secure a property below their initial budget.”
Rightmove’s graph shows that while two borrowers could meet the average asking price for first-time homebuyers with a mortgage, for one individual it is not possible.
The best mortgage rates and how to find them
Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.
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