The April buy-to-let stamp duty deadline created momentum which gave "early impetus to the bottom of the market", while also having the knock-on effect of energising the higher sectors of the market, according to the Index.
While the lower end of the market reported a monthly price drop of 1.4%, the momentum it created looks to have enabled owner-occupiers of these properties to trade up. This has built an onward chain reaction of higher demand in higher price brackets as more people can move.
Upwards price pressure has moved into the typical second-stepper sector (three or four bedrooms excluding four bedroom detached properties). Prices are up by 0.6% (+£1,512) this month, and this sector compared to the others has seen the largest year-on-year percentage rise, up by 8.6% (+£20,519).
The ‘top of the ladder’ sector (four bedroom detached and five bedrooms or more) has seen the biggest rise this month, up by 1.9% (+£9,970).
Rightmove says that following the buy-to-let rush, first-time buyers now have an opportunity to fill the void with less competition from typically faster-moving cash-rich landlords.
Miles Shipside, Rightmove director and housing market analyst, commented:
"Chains need a buyer at the bottom to enable everyone to move, and that was boosted by investors looking to avoid the 3% levy introduced on April 1st.”
"While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy-to-let rush were actually first-time sellers looking to trade up. They used the heightened demand from investors competing fiercely with first-time buyers to springboard themselves onto the next rung of the housing ladder.
"There’s a whole army of aspiring first-time buyers keen to get on the ladder and they now have a 3% price advantage over the formerly more agile legion of landlords, some of whom have retreated for the time being. First-time buyers could fill some of the gap but sellers of properties with two bedrooms or fewer need to realise that with less overall demand they need to price cheaper to match first-time buyers and highly-taxed investors."
Tanya Jackson, Yorkshire Building Society’s Head of Corporate Affairs, commented:
“The buy-to-let rush boosted house prices in April, however, now that the stamp duty increase has come into force we should see house price inflation normalise in the coming months. Looking to the long term trends, prices are still increasing well beyond wage growth on an annual basis and are likely to continue to do so in the future, regardless of an expected slowdown in activity around the EU referendum. Demand is likely to continue to outpace supply as a result of both the backlog of people looking to buy their first home, along with enduring interest from investors attracted to the rate of return the property market has to offer."
