The second step is looking for larger homes that push up house prices

Asking home prices rebounded in September after a summer slump thanks to a boost in second-tier demand looking for larger homes, according to new figures.

The average asking price for a home rose 0.7 per cent this month to £367,760, reversing the 1.3 per cent decline seen in August. On an annual basis, prices jumped 8.7 percent.

The market remains ‘surprisingly resilient’ and the announced stamp duty cuts in the mini budget could spur more demand – and push prices higher – in the coming months, according to Rightmove.

It comes despite the chancellor failing to introduce a long-awaited full overhaul of stamp duty and instead doubling the threshold at which it is paid to £250,000 – saving home movers a maximum of £2,500.

Price growth this month was mostly driven by the “mid- and high-end market segments,” with demand for three- and four-bedroom homes up 2 percent from last year’s “overheated market.”

Average asking prices for second-move homes rose 0.5 per cent in the month to a new record of £340,513.

“These numbers suggest that for those who can afford it, moving into a home with more space remains a priority, even as personal finances swell,” said Tim Bannister, director of property science at Rightmove.

On the other hand, demand from first-time buyers has fallen as affordability has become increasingly stretched after sharp price increases in recent years and a growing cost-of-living crisis.

The average asking price for a starter home rose 0.2 per cent to £224,479, with annual growth of 7.4 per cent.

The government has announced better stamp duty cuts for first-time buyers than other homebuyers, in an effort to ease the burden but experts warn it could have the opposite effect.

While many had hoped for an overhaul of stamp duty, the chancellor simply chose to double the minimum at which house movers were charged – from £125,000 to £250,000 – saving them a maximum of £2,500.

But the relief for first-time buyers would rise from £300,000 to £425,000, potentially saving them more. On a £425,000 home the first time buyer would save £6,250.

This means two-thirds of homes are now free of stamp duty for first-time buyers in England, and a third of homes are free for all buyers, according to Rightmove.

Stamp duty cut off calculator: Calculate how much you’ll pay to move home

The property website said the cuts “may provide some support” for those trying to move up the housing ladder but also She warned that it could stimulate more demand and push prices higher.

“Demand has softened over the past few months, but Friday’s announcement is likely to spur more demand,” Bannister said.

If this leads to a huge jump in potential buyers vying for the limited number of properties for sale, it could lead to some unseasonal price hikes over the next few months.

Changing the first time buyer threshold means we can see more first time buyers who can afford to move into a larger home as their first step.

“With buyer demand increasing, we also expect the current trend of more properties coming to the market to continue, providing more choices for buyers.”

Richard Davies, managing director of Chestertons, believes cuts in stamp duty “could prompt home hunters who have previously put property searches on hold to resume business”.

He concluded that “if this additional demand is not quickly met, the tax cut may reinforce the existing imbalance between supply and demand which in turn leads to an initial rise in real estate prices.”

Total buyer demand is down just 2 percent from the same period in 2021 and is still 20 percent higher than the five-year average before the pandemic, according to Rightmove.

Meanwhile, supply has increased with the number of homes coming to market up 16 percent this month, which marks a return to 2019 levels.

London, which last month saw the biggest monthly drop in prices, saw prices rise the most in September – by 2.1 per cent. However, prices rose year-on-year by 6.9 percent, making the capital the slowest-growing region.

Prices in Wales and the West Midlands fell by 0.6 per cent and 0.4 per cent respectively in the month, although over the course of the year they were some of the fastest growing regions.

Richard Freshwater, director of estate agents at Chevens in Cambridge, said: ‘The property market has been driven by insufficient supply for decades and while there have been reports of a slowdown in demand, particularly for new build homes, we have seen regional markets continue to thrive.

Rising interest rates are prompting some buyers to rush out and fix their mortgages before rates increase, according to Matthew Thompson, Chestertons head of sales.

“We are faced with a growing number of home hunters who want to secure a property as quickly as possible and decide to take out a fixed rate mortgage,” he said.

This contributed to the real estate market remaining a busy and competitive month of September.

“As the cost of living crisis looms, we are also seeing some buyers compromise their priorities in order to secure a property within their starting budget.”