The price of property coming to market in October increased by an average of 1.8% (+£5,983), according to Rightmove’s latest house price index.
This is the highest percentage monthly rise at this time of year since October 2015. In addition, this is the first time since March 2007 that Rightmove has recorded a ‘full house’, with all market sectors and all regions of Great Britain having hit new record price highs in the same month.
Rightmove said the continued fast turnover of property for sale and a window of opportunity to buy before a potential interest rate rise seem to have overcome the final expiry of all stamp duty incentives and are keeping activity robust.
Tim Bannister, Rightmove’s director of property data, said: “Competition for property for sale remains hot this autumn, with average prices jumping by almost £6,000 in the month. Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors of first-time buyer, second-stepper and top of the ladder hitting all-time highs.
“This ‘full house’ is an extremely rare event, happening for the first time since March 2007. The stock shortages started after the first lockdown, and they look set to continue with the underlying housing market fundamentals remaining strong, and an additional incentive to buy and fix your mortgage interest rate before a widely expected rate rise. Mortgage interest rates are lower than they have ever been before and lenders are keen to lend in a competitive market, with employment and wage growth also robust. The number of sales agreed continue to be strong despite the end of the stamp duty incentives.”
The number of sales being agreed was up by 15.2% in September compared to the same period in 2019, which is the best ‘normal market’ comparison. This high level of demand is stalling a recovery in the depleted available stock for sale despite a continuing upward trend in properties coming to market. The latest weekly snapshot shows that the number of new sellers coming to market is still marginally down on the same period in 2019, but only by 3.2% as opposed to 9.3% for the period as a whole.
Rightmove said this continuing imbalance, with demand outstripping supply and leading to record prices, presents an opportunity for owners looking to sell and cash out if they are downsizing or not needing to buy another property.
The window is also open for movers who wish to sell and buy again before a likely interest rate rise, which is widely expected as the Bank of England seeks to control resurgent inflation. In these ‘full house’ market conditions, with many homes being snapped up quickly and sellers having a choice of competing buyers, those buyers who have already sold their own property subject to contract or have nothing to sell will have the most powerful negotiating hand to secure their ideal home. Estate agents report that owners who are motivated to move are putting their property on the market before they have set their heart on an onward purchase, and once they have sold their own subject to contract their new status as a ‘power buyer’ helps them to secure a suitable property when it comes on the market.
Bannister added: “2021 has been the year of the power buyer, with those in the most powerful position to proceed quickly and with most certainty ruling the roost over other buyers who have to sell but have yet to come to market. One agent’s analysis that 87% of their sales agreed were snapped up by buyers who were already in a position to proceed is fairly typical of reports from many agents. Buyers being able to prove they are mortgage-ready or have cash in the bank helps them get up the pecking order.
“Whilst available stock for sale is still close to record lows, there are signs that this has stopped falling and is stabilising this month, so fresh new choice is slowly growing. As we approach the end of the year, many prospective buyers may be distracted by a more normal family Christmas than in 2020, giving more determined buyers who have already sold their own property an opportunity to act fast and buy with less competition.”
Peter Beaumont, CEO of The Mortgage Lender, said: “House prices growth has finally dipped after months of being squeezed from all corners. However, there are still not enough homes on the market to meet the ever-growing demand from buyers, which until it evens out, will keep putting pressure on asking prices. On top of this, UK-wide shortages mean material costs have risen significantly, which along with surging labour costs, is pushing up the prices of new builds. It is also making extensions and renovations more expensive, which will impact sales in the longer term. This will have a domino effect on house sales, as sellers are forced to up their asking prices.
“But with low mortgage rates remaining available while the BoE base rate stays put at 0.1%, there continues to be a strong incentive for buyers to get on, or move up, the property ladder. It can be difficult to access the best mortgage deals during a period of fierce competition, so it’s important that buyers take time to shop around for the best lending options to suit their individual circumstances.”