THE average price of property coming to market is at another all-time high, up by £3,843 to a new record of £307,033.
The chancellor’s autumn statement and announcement of the April buy-to-let stamp duty deadline created momentum which gave early impetus to the bottom of the market.
It has also had the knock-on effect of energising the higher sectors of the market.
This has contributed to April’s monthly rise of 1.3 per cent being driven by growth in the second-stepper and top-of-the-ladder sectors of the market, with the lower end of the market reporting a fall.
Miles Shipside, Rightmove director and housing market analyst comments: “The onset of spring is traditionally when the housing market swings into full-on action and while the early Easter this year could be credited with its very active current state, the housing market actually received a much earlier kick-start at the end of November.
“Chains need a buyer at the bottom to enable everyone to move and that was boosted by investors looking to avoid the three per cent levy introduced on April 1.”
The bottom sector of the market with two bedrooms or fewer has in recent years seen high demand from both first-time buyers and buy-to-let investors, creating upwards price pressure.
The further demand boost from those looking to complete before April 1 has now dissipated, resulting in a 1.4 per cent drop in April in the average price of a property coming to market in this typical first-time-buyer/investor sector.
However, the momentum it created looks to have enabled owner-occupiers of these properties to trade up.
This has built an onward chain reaction of higher demand in higher price brackets as more people can move.
Upwards price pressure has moved into the typical second-stepper sector (three or four bedrooms, excluding four-bedroom detached properties).
Prices were up by 0.6 per cent (+£1,512) in April, and this sector compared to the others has seen the largest year-on-year percentage rise, up by 8.6 per cent (+£20,519).
The ‘top-of-the-ladder’ sector (four-bedroom detached as well as five bedrooms or more) saw the biggest rise in April, up by 1.9 per cent (+£9,970).
Their annual rate of increase remained the lowest, however, at 5.1 per cent.
Miles Shipside continued: “While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy-to-let rush were actually first-time sellers looking to trade up.
“They used the heightened demand from investors competing fiercely with first-time buyers to springboard themselves onto the next rung of the housing ladder.
“After several years of being held back from moving by post-credit-crunch price doldrums, they have now benefited from a heady combination of price growth, historically cheap interest rates, and confidence of a quick sale with purchasers working to a tight deadline.
“Trader-uppers have now been unleashed and this has spread demand upwards and helped to form longer chains.
“Interestingly, there has been a stamp duty double whammy effect pushing up prices in these higher sectors too.
“Earlier reforms in December 2014 reduced stamp duty for all properties priced below £937,000, especially around the previous punitive thresholds, also boosting demand and prices.”
While demand from some buy-to-let landlords has dropped away, Rightmove recorded its busiest ever month for visits to the website in March.
It is likely that appetite from investors will return for the right property at the right price and yield, but in the meantime it gives first-time buyers an opportunity to fill the void with less competition from typically faster-moving cash-rich landlords.
Mr Shipside concluded: “There’s a whole army of aspiring first-time buyers keen to get on the ladder and they now have a three per cent price advantage over the formerly more agile legion of landlords, some of whom have retreated for the time being.
“First-time buyers could fill some of the gap but sellers of properties with two bedrooms or fewer need to realise that with less overall demand they need to price cheaper to match first-time buyers and highly-taxed investors.”