Two-bedroom and smaller homes saw asking prices surge by 1.1% between December and January, with more first-time buyers attracted to the market since the new stamp duty relief rules came into effect after the Autumn Budget.
National average asking prices in the UK went up by 0.7% over the past month, the equivalent of £2,067 based on average property prices, according to research from Rightmove. But the steepest rise was seen in the small property market, typically the target of first-time buyers and investors, which saw asking prices go up by £2,098, bringing properties in this bracket to an average cost of £188,024.
The strong demand for this type of property, particularly since stamp duty relief was brought in for first-time buyers purchasing homes at less than £300,000 (or between £300,000 and £500,000 in London), is the main driver behind the price increase. Many experts expect the trend to continue, which is great news for property investors and buy-to-let landlords whose housing stock includes smaller or lower priced homes, as well as first-time buyers who buy in the right place, at the right time.
“The boost given to first-time buyers by the abolition of stamp duty for most of their purchases means that properties in that sector are facing higher demand and consequently more upwards price pressure, especially if supply is limited,” Rightmove said.
Better than expected
The strongest annual asking price rise was seen in the West Midlands, where the value shot up by a huge 5.8% to £241,163. This was closely followed by the north-west, where asking prices were 5.5% higher than during the same period last year, and Yorkshire and the Humber which registered a 4.5% increase.
As many predicted, London has been the hardest hit, recording a year-on-year drop in asking prices of 3.5%. However, there are huge variations across the capital, with zone 2 seeing 7.7% wiped off the average asking price, while zone 6 bucked the trend with an average increase of 2.3%.
Andy Frankish, director of Mortgage Advice Bureau, said: “Whilst asking prices haven’t increased significantly in January, frankly the situation is better in most regions than many had hoped. That said, London is still seeing prices cooling, which is a continuation of the trend which has been brewing since last year.”
With the best value for money in properties still to be found in the Midlands and north of the country, many predict that the continued trend for rising prices in these regions compared to other parts of the country will provide a boost for first-time buyers as well as investors who choose to purchase properties there.
