Why do asking prices keep rising?
It might seem pretty odd to hear that house prices keep rising, especially during a global pandemic. But that’s exactly what we’re seeing right now, and this month, asking prices are at a record high in all countries and regions across Great Britain.
For the third consecutive month, the national average has been pushed to a record high of £336,073. You can find our latest House Price Index with more details here.
If you’re thinking of moving, all of this can feel pretty overwhelming. So we want to make sure you know why the housing market is so busy and what’s behind the price growth.
Why asking prices are rising
A record number of people are looking to move
The demand for homes is outstripping the number of properties available to buy. More than 180,000 new properties have been listed on Rightmove since the start of last month, but it’s still not enough to meet demand. Homes are selling faster than ever before, and not only that, a record number are being sold at or above asking price.
Large, detached homes with big outdoor spaces are in high demand from buyers with big budgets, with many now working remotely and commuting less. These sales at the top end of the market are contributing to the largest rise in asking prices we’ve seen at this time of the year since 2015.
Countryside and coastal relocators
Lots of people are moving from more expensive city areas to the countryside or the coast. This is pushing up prices in towns and villages in the most in-demand regions, including Wales and the South West.
Our property expert Tim Bannister says: “Buyer demand is up by 44% in Wales, compared to a year ago, which is the highest increase of any part of Britain. Average prices are well below the national average, offering good value as well as beautiful rural and coastal surroundings.”
In the South West, homes are selling at the fastest rate ever recorded in England, with 28% of properties selling within a week of being listed on Rightmove.
You can find out what’s happening to asking prices in your region here.
Stamp duty savings
Stamp duty tax savings and record low interest rates have helped many to afford higher prices, so they can find a new home that suits their changing needs.
The temporary reduction of stamp duty tax rates in England and Northern Ireland has offered buyers a potential saving of up to £15,000, so many buyers are racing to move before the deadline. You can find out more about the stamp duty changes here.
Record low interest rates and 95% mortgages
Ultra-low interest rates have also helped more people to get on the property ladder, or to upsize to bigger and more expensive homes.
Also, a government-backed mortgage guarantee scheme launched in March, offering buyers with small deposits access to 95% mortgage loans. Many high loan-to-value mortgages were withdrawn by major high street lenders in the past year or so, but many have returned to offering 90% and 95% mortgage products.
What’s the forecast for the rest of the year?
At Rightmove, we track what’s happening to prices and levels of buyer demand before anyone else. A very early indication of demand is the number of people sending enquiries to estate agents, which is still up by almost 40% on the same period in 2019, despite the stamp duty holiday tapering out.
However, we are seeing early signs of the market cooling. The number of sales agreed is still growing, but available properties are in short supply.
Our property expert Tim Bannister says: “Higher prices combined with a lack of homes coming to market are reducing some buyers’ ability or desire to move, and while we expect the market to remain robust, there are early signs of a slackening in the incredible pace of activity that we’ve seen over the last year.
“This super-charged activity cannot go on forever, but we expect the market to remain vigorous for at least the remainder of the year.”
So what does all this mean if you want to move?
If you’re thinking of selling your home, it’s a great time to attract the biggest number of potential buyers and to achieve a realistic asking price. Many buyers will be looking to move in before the end of summer.
If you’re looking to buy, the most competitive segment of the market is for big, detached houses priced above £500,000. It’s definitely worth setting up instant alerts so when a property that matches your search criteria becomes available, you can contact the estate agent quickly. If you’re selling a home in order to move, it’s worth booking in a property valuation and instructing an estate agent as soon as possible.
You’ll find our top tips for buyers in a busy market here.
If you’re a first-time buyer, remember you won’t pay any stamp duty tax on a home priced at or below £300,000. And there are a number of government initiatives such as the mortgage guarantee scheme, First Homes and Help to Buy which are all worth looking into.
READ MORE: Stamp duty tax: what’s changing?