With the data now coming thick and fast, the shape of the mini-boom is becoming ever clearer. Under the circumstances, it’s not surprising it’s a little unusual. Traditionally, it’s first time buyers that drive the market, but not this time. This time the market is being driven by buyers of three and four bed houses, as existing homeowners seek larger properties.
Many first time buyers have been hit by a double whammy of the shortage of high loan to value mortgages (90% and 95% deals) and greater fears over their job security (they tend to be younger). Existing homeowners, in contrast are more confident about their prospects and are buying and selling in significant numbers. Nationwide reports mortgage approvals for new purchases hit 85,000 in August. The monthly average during 2019 was 66,000. Data from Rightmove shows the biggest increase in sales is occurring at the top end of the market (up 104%), followed by second-stepper homes (up 55%). One and two bed homes are still selling, especially in lower value areas, but the increase was a smaller 36%.
Research carried out by Nationwide shows, although 19% of those considering a move had been put off by the pandemic, 10% say they are moving as a result of it and another 18% are now actively considering a move. Their motivations are clear. Most are doing so to move to another area (35%), around 27% are looking for more garden or open space and 25% want a bigger house.
As has been widely reported, they are tending to concentrate their searches in less urban areas. It’s something that is increasingly prevalent in the older age groups – it’s a priority for 62% of over 55s, dropping to 47% for 18-24 year olds. Despite being the ultimate urban centre, London has also seen a rise in demand, but mostly in the outer areas and not in zone 1, where sales volumes have dropped by 14%(source: Rightmove).
Such increases in demand have, of course, resulted in upward pressure on prices. Average asking prices are now 5% higher than they were this time last year. The biggest risers are; Yorks & Humber (up 7.2%), the North West (up 7.1%) and the North East (up 6.4%). London’s prices are up by 4.9% (source: Rightmove).
Tim Bannister, Rightmove’s Director of Property Data comments:
“Increased competition for second-stepper homes has pushed prices to a record this month for those looking to take the next step up the ladder. Needing more space has always been the most popular reason for moving house, but now there’s a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property.”