It’s been a record-breaking summer for UK property

Huge demand for mid-size, family homes

What's happening in the property market? Find out...

Figures from the Office for National Statistics illustrated that the average house price across the UK has increased by £31,000 to £266,000 over the past year – that’s just over £2,500 a month. Pent-up demand, the ‘race for space’ and the waiver on stamp duty have all contributed to the increase in property prices. 

We look at what’s happening in the market this month, predictions for the cooling of the boom, as well as a deep dive into mortgage lending and trends affecting both buyers and sellers.  

First-time buyers and second steppers join the market in vast numbers despite asking prices rising… 

There’s great news for sellers this month as we continue to see a high level of activity in the first and second-time buyer sector. This is a great sign for the months ahead. These new buyers to the market are creating massive demand for two and three-bedroom houses. For those of you thinking of selling a similar home that’s currently in high demand, now would be a great time to come to market. 

Don’t be fooled by a 0.3% downturn

The current outlook is that after a two-year period of unprecedented growth across the UK property market, August saw a slight decrease in overall demand of 0.3%. A small downturn at this time of year is not unusual. The school summer holidays normally lead to a stalling of activity and a slight reduction in prices. However, the slowdown of activity was seen largely in the sales of larger premium homes (four bedrooms and above). Owners of two and three-bedroom homes can still expect sizable demand.

The first and second-time buyer market is buzzing with activity

The growing new-homes market and generous lending conditions make finding and buying a home more achievable for those at the start of their property journey. These lower-priced sectors have been much less affected by the withdrawal of the stamp duty incentive – small and mid-size properties are up by £1,328 (+0.6%) and three-bedroom second-stepper properties are up by £975 (+0.3%). 

And it’s a trend that looks set to continue as the government has announced policies that aim to make owning a home more achievable. This is, of course, great news for sellers. More buyers entering the market means higher demand for current properties and a better price. 

The average asking price is over £40,000 higher than five years ago

When we widen the scope beyond recent months, demand is still way up – 56% in fact across the same period in 2019. And, when compared with 2016 the amount of growth in the market is staggering, as the graph below shows. Whereas the average asking price for a UK home 5 years ago was around £290,000 it is now above £330,000 – that’s an increase of over £40,000.

Has your home increased in value?

It’s no longer just London seeing record growth… 

For decades, London forged ahead of the UK property market, but in recent months a new trend has emerged. The desire for more affordable homes with local facilities and transport links is now growing. Being closer to the great outdoors such as coastline and the countryside is also now highly sought after. 

The southeast, northwest and northeast of England have remained consistently buoyant and average asking prices increased in these areas in July. The market in Wales also continues to soar, with average prices up 10.9% on this time last year. In Scotland, sellers can expect the quickest sale – just 23 days. If you own a property in one of these areas, you should be making the most of the favourable market. 

How will the stamp duty holiday ending affect the property market in England?

The stamp duty holiday is entering its final stages and, from October, it will revert back to standard rates. Sources at Halifax suggest that buyer activity should continue to ease over the coming months. This will lead to a steadier property market than we’ve seen so far this year. However, if cheap borrowing and limited property supply continues, buyers will likely remain in the market and house prices will continue to rise.

What's happening to the property market in Scotland?

According to Zoopla, there has been a strong price growth in Scotland, with properties rising at 5.1% this year. The exceptional performance of Scotland’s housing market post lockdown has echoed the rest of the UK. The market here, like in England, is being driven by pent-up demand and changing buyer needs, with a renewed appetite for space and suburban living. There is still a low supply of homes listed for sale, especially 2 and 3 bedroom family homes. This, teamed with the limited choice for would-be buyers may well impact demand over the next few months and into 2022, leading to a natural slowing in buyer interest but it’s difficult to tell at this stage.

What’s happening in the lettings market?

According to the National Residential Landlords Association, demand for private accommodation is the highest it’s been since the first quarter of 2016 thanks to a relaxation of Covid restrictions and a more buoyant economic outlook. There is considerable activity throughout the UK but particularly in Yorkshire and the Humber, Wales, the South West and the South East so if you’re looking to invest in buy-to-let, these areas are well worth looking into. 

And there’s some reassuring news if you’re a pet-friendly landlord as Rightmove have reported that demand for pet-friendly rental properties has increased by 120% compared to last summer as renters continue to reconsider what’s important.

Final thought

As UK homes continue to be in high demand, selling quicker than ever at record prices, it’s a great opportunity for homeowners to sell their properties during the autumn months and move to a new home in time for Christmas. “Sell before you buy” is proving the best tactic for many to secure their next home in this fast-moving market.

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