For the first time in 2021, slowing demand from high-end buyers in the UK prompted lower asking prices across the board.
First Monthly Price Dip in UK This Year
According to Rightmove, the national average listing price in the UK fell slightly, -0.3%, to L1,076 (US $1,489) in the four weeks between July 11 and August 7 compared to the four weeks prior.
This was the first monthly average listing price dip for 2021 despite home values being up +5.6% on an annual basis. As a result, the average asking price came in at L337,371.
Why the Price Drop?
Housing experts with Rightmove believe this slight price dip (-0.3%) was spurred by a -0.8% dip in asking prices for luxury tier homes typically with four or more bedrooms.
The drop of -0.8% in lux asking prices was most likely driven by the phase-out of UK’s stamp duty holiday.
As of the end of June, savings associated with the stamp duty holiday have gone from L500,000 to L250,000. When the stamp duty holiday disappears at the end of September, savings will go from L250,000 to the standard L125,000.
Only High End of Market Seeing Less Demand & Lower Prices
According to Tim Bannister, director of property data for Rightmove, said, “Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives.”
Mass-Market Properties Seeing High Demand and Rising Prices
Bannister emphasized that it was important for potential buyers and sellers alike to make a distinction between entry-level and/or “second-stepper” properties (three-four bedroom homes) and high-tier properties. Both entry-level and second-stepper properties are continuing to see high demand from potential buyers and record-high prices.
Bannister said, “…the mass market of properties that caters to first-time buyers and second-steppers is still seeing high demand and upward price pressure leading to new record high average prices in those sectors.”
Rightmove indicated that entry-level properties with two bedrooms or less have seen prices rise +L1,328 to L208,714. Second-steppers have seen prices increase +L975 to L 309,643.
Thanks to Rightmove and MansionGlobal.
