Property prices in England and Wales have increased 0.5% month on month, with the residential market seeing an active start to 2016, according to the latest index figures.
Prices are also up 6.5% year on year taking the average price of a home to £290.963, the data from Rightmove also shows, making it the second highest festive period rise since 2007.
However, the good news for those getting onto the property ladder is that prices in the lower end of the market where first time buyers are usually found, typically two bedroom homes, have only increased by 0.1%.
Demand as measured by visits to the Rightmove website in the first working week of 2016 is up by 21% on the same period in 2015.
‘Upwards price pressure remains, with the second highest rise seen at this time of year for nine years but encouragingly for first time buyers there’s more fresh choice with more property coming to market in their target sector,’ said Miles Shipside, Rightmove director and housing market analyst.
‘With their asking prices pretty much the same as a month ago, perhaps the knock-on effects of the more punitive landlord tax regime have arrived early and they now face a dilemma over whether to buy now or wait to see if prices drop in this sector over the next few months,’ he added.
While the 0.5% rise in new seller asking prices is lower than the 1.4% recorded in January 2015, Shipside pointed out that it is higher than every other January since 2007, before the credit crunch began.
A breakdown of the data shows there are variations across locations. Prices fell by 0.9% in Greater London to an average of £610,741 and are up 7.8% year on year. They also fell by 1.8% in the East Midlands to £182,318 and by 0.2% in Yorkshire and Humber to £165,722, but are up 2.9% and 2.8% respectively year on year.
The biggest monthly rise was in the South West, up 3.5% to £282,373, and up 5.5% year on year. They increased by 2.3% in the West Midlands to £198,595 and up 4.9% year on year while they rose 1.8% in the North East to £142,006 with annual growth of 5.1%.
In Wales prices increased by 1.6% month on month to £166,051 but are down 0.5% compared to a year ago. They rose by 1% in the East of England to £312,921 and up by 9.8% year on year, by 0.6% in the South East to £383,787 and by 7.3% year on year while in the North West prices were up just 0.2% to £171,588 and up annually by 4.9%.
The report also shows that a lack of property coming to market has been an upwards driver of both prices and unfulfilled demand, though encouragingly there has been a slight 1.8% year on year uplift in the number of newly marketed properties.
However, the only sector that has increased is that of two bedrooms or fewer, so the only beneficiaries of this are likely to be first time buyers or investors looking to buy and complete before the April stamp duty hike.
Some of this increase could be due to some landlords selling up or more first-time sellers marketing to take advantage of any first quarter surge in investor activity and guard against a post-April slump.
‘Perhaps because of the increased competition among sellers and a keenness to attract buy to let investors before the April deadline, prices have hardly increased month-on-month for properties with two bedrooms or fewer,’ said Shipside.
In this stock starved era it will come as a relief to first time buyers that their negotiating power may already be improving because the forthcoming tax changes, and there is a window of greater choice as more owners of smaller properties try to sell,’ he explained.
Rather than waiting until later in the year, having a good look around now while choice is up and interest rates remain unchanged could get you onto the ladder sooner and at an acceptable price. For several years buy to let investors have been enticed by high tenant demand and attractive returns, but as their window of opportunity starts to close it already appears to be opening wider for first time buyers,’ he added.