Demand for smaller homes rises as asking prices reach a new high

Posted on Sunday, July 26, 2015

Analysis from leading property web portal Rightmove shows the biggest gap between demand and supply is in the first-time buyer sector, with the number of enquiries per property for two bedrooms or less being 24% higher than for larger properties of three bedrooms or more.

A new record high for the price of property coming to the market was reached for the second consecutive month, albeit only a small 0.1% increase on the month before.

The average new seller asking price is now £294,542. This is likely to be being influenced by the onset of the seasonal summer slowdown, and buyers’ constraints in affording record prices.

The latter reinforces the need for more new build homes – affordable, of the right type and in the right locations – and emphasises the importance of the recent government announcement on speeding up residential planning permissions aimed at boosting supply. The shortage is most acute for smaller homes with two bedrooms or fewer, where Rightmove sees the biggest demand in excess of supply.

Miles Shipside, Rightmove director and housing market analyst comments: “Another month, and another record high in the price of property coming to market. While the monthly increase is very modest, the same period a year ago saw a monthly fall of 0.6% which is more the norm given the onset of the summer holiday season. However, given the widely acknowledged supply crisis and a sharp drop in new seller numbers this month compared to this time last year, it is somewhat surprising that the rate of increase has slowed to such an extent. Recent government announcements including relaxing residential planning requirements on brownfield land are an important part of the mix in improving affordability if they follow through to cheaper land prices.”

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