The number of average sales rose in August, with one eighth of homes selling above their price tag
The property market’s mini-boom has continued throughout the summer, with more homes sold above asking price, but economists say there are signs it may be beginning to lose steam.
Last month, the proportion of homes sold for more than their original asking price hit its highest level in nearly five years, according to research by the National Association of Estate Agents (NAEA).
However, the enthusiasm spurred by a stamp duty holiday and the release of pent-up demand is beginning to wane.
Economists said that visits to the three main property websites have started to fall, and while estate agents reported that 13 per cent of homes went for over the asking price, the majority of buyers managed to get a discount in August.
The NAEA said that while the number of average sales rose in August, and an eighth of homes sold above their price tag, 53 per cent of properties sold for less than the original asking price.
Its research also showed demand was beginning to fall, with the number of house hunters registered per estate agent branch falling from 428 in July to 396 last month.
Home buyers have been given a stamp duty break on the first £500,000 of a property purchase until the end of March 2021, delivering a maximum saving of £15,000.
This has added fuel to a property market mini-boom, even as the UK fell into its deepest recession on record in the second quarter, with house prices rising to fresh record highs.
Meanwhile, visits to property portals Rightmove, Zoopla and On The Market trended down in September, and have already fallen below their August peak, according to Pantheon Macroeconomics.
On top of that, demand from first-time buyers – who have been the main drive in recent years – has began to fall, with the property market propped up by equity-rich existing home owners looking for larger places.
But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, told the Times: Online search data suggest the initial wave of demand for bigger homes caused by Covid-19 now is fading. Recent gains in house prices likely will not be sustained.
Research by Zoopla shows that existing homeowners have overtaken first-time buyers as the biggest source of demand in the housing market.
The property website said the change had resulted from the coronavirus pandemic as younger families had been increasingly shut out by lenders.
Zoopla’s latest house price index found demand from homeowners looking to move had risen 48 per cent over the first three months of this year. But demand from first-time buyers was up 11 per cent – the first time since 2017 that first-time buyers had not been the biggest driver.
It comes as many low deposit mortgages have disappeared from the market in recent months as lenders have become more wary about ‘riskier’ lending.
Lenders are now so cautious about lending to first-time buyers with just a 10 per cent deposit that they are limiting this type of lending to one day fire sales.
