"Government policy has sought to reduce this activity through higher landlord stamp duty and lower income tax reliefs and so tilt the balance back towards first-time buyers. "
This national average has been dragged down by properties with two bedrooms or fewer which saw a 0.1% monthly price fall - the usual target market for both affordability-stretched first-time buyers and buy-to-let investors.
However mortgage approvals for new buy-to-let purchases are down by 14% compared to a year ago and by 53% compared to three years ago, giving an autumn opportunity for those looking to get on to the housing ladder.
Miles Shipside, Rightmove director and housing market analyst, commented: “With the government using the tax system to try and help first-time buyers while deterring out-of-favour landlords, prices in this sector have been subdued as intended. That gives aspiring first-time buyers an autumn opportunity to negotiate a favourable deal.
“Stretched buyer affordability and a slowdown in price rises are the natural outcome of property prices increasing over the past seven years at a far faster pace than average wages. The prices of properties with two bedrooms or fewer have kept pace with the rest of the market with a 32.8% price uplift in that timescale, partly driven by buy-to-let investors seeking better and less risky returns than are available from other asset classes.
"Government policy has sought to reduce this activity through higher landlord stamp duty and lower income tax reliefs and so tilt the balance back towards first-time buyers. Help to Buy is also encouraging first-time buyers to buy brand new homes and may to an extent be redirecting them away from the second hand housing market.
“Landlords are clearly buying far fewer properties and that leaves a gap in the market for first-time buyers. While landlords were hit with a 3% stamp duty surcharge on property purchases back in April 2016, in contrast most first-time buyers were effectively awarded stamp-duty-free status in November 2017.
"The fall in prices at the bottom of the market during what is a traditional busier time means that those keen to sell need to price accordingly, which gives an opportunity for those stamp-duty-free first-time buyers to negotiate harder.
"More activity may follow if prices remain subdued, with stamp duty relief and falling prices helping their affordability. If the Chancellor’s budget later this month encourages more landlords to sell to long-term tenants for rumoured capital gains tax relief, then landlords who are looking to sell and renters who aspire to become first-time buyers could work together for their mutual benefit.”
