Rightmove figures reveal the average asking price for a property in the UK rose by 1 per cent this month, the smallest rate of increase for September since 2010.
The modest 1 per cent rise takes the average asking price for a property in the UK to £307,245, up from £304,061 in September.
Rightmove says that the slowest sector – where prices fell by 0.1 per cent – is properties with two bedrooms or fewer, as activity in the buy-to-let market continues to wane on the back of tax increases that are hitting landlords in the pocket.
It reports that mortgage approvals on buy-to-let properties are down 14 per cent over the past 12 months and 53 per cent down on 2015.
Increased activity from first-time buyers, with mortgage approvals up 1 per cent since this time last year, is only partially plugging this gap.
Miles Shipside, Rightmove director and housing market analyst, comments: ‘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.
‘The story at this time of year for the last five years has been an average autumn bounce of 1.6 per cent in the price of property coming to market. While all regions have seen a monthly rise, this year has a more subdued narrative with only a 1 per cent uplift as the script has more subplots to affect the mood. While the backdrop of political uncertainty and stretched buyer affordability remains the same, this month has price drops at the bottom of the market dragging down the national average.’
Brian Murphy, head of lending at the Mortgage Advice Bureau, agrees that the current situation creates opportunities for first-time buyers. ‘Many in the industry have long held the view that the introduction of increased taxation on landlords was partly designed to create this very situation and help to enable more first-time buyers to purchase their own property due to lack of competition with landlords for the same properties.
‘So, to that end, more stock at entry level with prices softening may assist that strategy. Certainly product rates, particularly for low deposit mortgages, remain very competitively priced, meaning that those first-time purchasers who are able to agree borrowing, may find themselves with a window of opportunity where market circumstances work in their favour.’
The ongoing reduction of activity in the buy-to-let market is also reflected in figures from the Hamptons International Monthly Letting Index, with the value of landlord purchases falling by £5.2 billion (30 per cent) in three years. The south-east has seen the most sizeable falls with 45 per cent fewer purchases from property investors. Falls are also reported in Scotland and south-west England.
The fall in the value of landlord-purchased properties has been caused not just by a reduction in the number of investors but also in a reduction in the amounts that they are spending, as more landlords seek out cheaper properties further north.
So far this year, 61 per cent of London-based landlords bought property outside the capital. This is an increase of 10 per cent over the past year and more than double the rate in 2012 (25 per cent).
Commenting on the findings, Aneisha Beveridge, head of research at Hamptons International, says: ‘The total value of homes purchased by landlords has fallen by over £5 billion in just three years. This is due to landlords buying fewer buy-to-lets and investors spending less on the homes they do buy. With two out of five London-based landlords looking outside the capital to buy their investments in search of higher yields and lower stamp duty bills, the average price of a home bought as a buy-to-let has fallen by 7 per cent since 2016.’
However, while activity levels may be falling, rents are rising. The average rent in September was £980 per calendar month, up 1.6 per cent over the year.
She adds: ‘Rental growth in Great Britain continues to gradually pick up. Rents rose in every region across Great Britain for the first time since January. London rents returned to growth for the first time in four months, fuelled by a pick-up in inner London.’