The Rightmove House Price Index for September 2020 has found that house prices improved by 0.2% month-on-month, making up for a drop of the same amount in August.
Year-on-year, this is an improvement of 5.0%, with national average asking prices reaching £319,996 in September 2020.
By sector, first-time buyers have seen asking prices decrease by 0.4% month-on-month in September, compared to +0.4% for second-steppers and +0.2% for ‘top of the ladder’ (four-bedroom or larger) homes; this equates to an annual change of +4.2%, +5.7% and +4.9%, respectively.
Sales agreed in the year to date, compared with the same period in 2019, dropped by 5% across Great Britain, but rose by 4% and 1% in the East of England and South East.
Wales (-16%) and Scotland (-21%) saw the largest drops in terms of sales agreed.
Rightmove estimated that there are nearly 40% more sales going through the buying and selling process compared to last year, leading to congestion of sales in progress.
In London, sales agreed for the year to date dropped by 3%; there is strong sales activity in Outer London, especially for top-of-the-ladder homes, while in areas like Zone 1 sales are down by 14%.
The capital was found to be the second fastest region for the average time taken to secure a buyer at 49 days, being beaten only by Scotland at 35 days.
This time last year, the average number of days to agree a sale in London was 20 days longer.
Nationally, the average time to secure a buyer has dropped from 62 days in August 2019 to 53 this August.
Tim Bannister, director of property data at Rightmove, said: “We’re hearing of challenges at all steps of the buying and selling process, including lenders having to deal with a higher number of mortgage applications and solicitors over their capacity, and we estimate there are nearly 40% more sales currently going through than at this time last year.
“The temporary stamp duty holiday means that there’s more urgency than usual for the congestion to be cleared by the end of March, making it vital for buyers and sellers to work closely with their estate agent and to make sure that they’re moving fast when the ball is in their court to complete a document or answer questions.
“We’d advise that buyers and sellers factor in at least an extra month to account for the current delays in the process, if possible, as time is already running short for sales that are agreed now to be completed by Christmas.”
Bannister added: “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.
“At the start of the year a fourth bedroom was very much a luxury for buyers trading up, but it’s now emerging as a must-have for those who are able to take that step.
“With overall asking prices just a few hundred pounds shy of July’s record, and buyer demand at an all-time high, those currently looking for their next home are likely to find that only offers close to the asking price will be considered, especially for larger homes.”
Tomer Aboody, director of MT Finance, said: “Demand for more space has never been higher, with buyers happy to compromise on London living in order to have the garden and study which so many now desire.
“Commuter belts are now considered to be widening, with areas further out than the home counties becoming attractive to buyers who can live with the extra journey time into the city.
“This trend doesn’t just apply to London but across all the main cities, and will continue to drive demand in future.
“Never has our island seemed so small, with the ability to work from home allowing people to move to more affordable areas and own homes which they never possibly thought they could.
“Going forward, it will be interesting to see how new developments are built and what amenities they will provide.
“There is likely to be more emphasis on creating small communities, providing shops, playgrounds and possibly even nurseries and schools.
“It’s also not surprising to see that the biggest shift has been in family buyers looking for bigger homes which are more expensive, but made more affordable by the highly liquid and low interest rate borrowing environment we are living in.
“With consumer spending at such low levels and the cost of commuting reduced due to more home working, people have the confidence and affordability to take that more expensive step.”
Jeremy Leaf, North London estate agent and a former RICS residential chairman, said: “The Rightmove numbers are always interesting as they are more up-to-date than most and help identify market trends.
“These latest are no exception and confirm what we are seeing on the ground – that a two-tier market is developing with strong demand for smaller three- and four-bedroom houses in particular as they prove more popular than flats.
“However, this extra demand is proving to be a victim of its own success as most lenders and surveyors seem unable to keep up due to lack of capacity – a bit like COVID-19 testing where demand far exceeds supply.
“But some vendors need to recognise this mini-boom won’t continue indefinitely as buyers are still cautious about taking on too high a commitment and what they consider over-paying for a property which may be in particular demand.
“Looking forward, we don’t see much change in the near term, even when the furlough scheme unwinds as the effects seem to have been already taken into account.”