House prices have dropped for the first time this year according to the August Rightmove House Price Index. While the drop in prices might have some home hunters celebrating that the property market is finally starting to cool down, for first-time buyers properties it is still heating up as house prices reach record highs.
Rightmove revealed that in August the average house price of properties coming to market had dropped by 0.3% this month, amounting to a £1,076 drop. However, while overall house prices appear to have dropped, according to Rightmove, it is only larger properties in the upper-end sector that have fallen in price. The prices of small more affordable properties have once again reached record highs this month, as demand continues to grow.
‘Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives,’ explains Tim Bannister, Rightmove’s Director of Property Data.
‘The mass-market of properties that cater for first-time buyers and second-steppers is still seeing high demand and upwards price pressure leading to new record high average prices in those sectors. In England there remains a smaller stamp duty saving of up to £2,500, though the window to take advantage of this saving by buying now and completing by the end of September is pretty much closed.’
First-time buyer properties which are stereotypically two-bedroom or fewer homes had seen the average house price increase by £1,328. This has raised the average first-time buyer house price to a record-breaking £208,714.
Three to four-bedroom homes usually pursued by homeowners looking to take the second step onto the property ladder had also seen a house price increase of £975 in August. The statistics show that the lower-priced property sector has been much less affected by the withdrawal of the stamp duty holiday incentive which is currently being phased out.
If you’re hoping for a further drop in house prices, you might be disappointed even in the high-end sector as Rightmove predicts that there will be a bounce-back in Autumn.
Buyer demand has remained strong, with individual buyer enquiries to agents increasing by 56 per cent compared to the same time in 2019. Since the number of properties available is still at record lows this has created a perfect storm for rising house prices.
If you’re a first-time buyer toying with house hunting, Rightmove warns that you should start looking very soon. You’ll need to act fast if you want to get a quick sale at a good price, as current house prices look set to keep on growing.