Soaring demand for space to work from home drove asking prices for three- and four-bed properties to a record high in September, according to Rightmove.
Data from the listing site (RMV.L) published on Monday shows the mini-boom in the UK property market shows no signs of fading, despite the economic crisis and warnings of a looming price crash next year.
Stamp duty cuts, low interest rates, pent-up demand and new interest in moving after lockdown have fuelled a resurgent market in the past few months.
The average asking price of properties coming to market on Rightmove rose 0.2% between August and September to £319,996. It was just £269 short of the record high set in July, but certain properties and regions did see new records set this month.
So-called “second stepper” homes with three or four bedrooms saw average prices hit £291,618, as more buyers looked for larger properties. Sales agreed for such homes are running at levels 55% higher than the same time last year, and overall UK property sales for the year to date are now down only 5% on the previous year.
Rightmove said nearly 40% more sales were believed to be proceeding than at the same time last year, leading to “congestion” in sales progress.
“The trend of up-sizing to a larger home has continued at pace over the past month, leading to record asking prices in the second-stepper sector, made up of three- or four-bedroom homes,” said the latest Rightmove House Price Index.
“This price record has been fuelled by buyers looking for more space, including both those who need extra space for their families and those looking for room to work from home.”
Tim Bannister, Rightmove’s Director of Property Data, said increased competition was forcing prices up as people looked to move 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.”
But recent research by a leading economic consultancy predicted UK property prices will plunge by 13.8% next year as the recent mini-boom begins to rapidly unravel.
The Centre for Economic and Business Research (CEBR) highlighted Britain “housing market paradox,” with soaring activity in recent months despite Britain only just emerging from the steepest recession on record.
A study by the economic forecaster said many of the drivers of the recent rebound in sales and prices were “transitory in nature,” and predicted as they tail off, prices will start falling later this year.
The CEBR expects pent-up demand will “work its way out of the system” in the coming weeks, while the furlough scheme is already being wound down and mortgage possessions will resume from 31 October. The stamp duty holiday ends next April, also hitting prices bar an expected “short spike” in the run-up to the deadline.