Demand for bigger homes is driving up property prices.

 

House prices continue to defy the broader economy, with rising prices reported again this month.

 

A new survey from property website Rightmove suggests that surging home prices are being driven, in part, by a desire to move to larger properties.

 

It makes sense. Following the period of lockdown earlier this year, estate agents report that homes offering a garden, space to work remotely, and proximity to green spaces are in high demand.

 

After all, the thought of living through another lockdown in a flat or city centre is probably too much for some.

 

Other factors driving property prices higher include the temporary stamp duty cut and pent up demand from buyers and sellers who could not complete transactions during the lockdown.

 

The survey found that there are almost 40% more property sales working through the process compared to a year earlier.

 

Asking prices rose by 0.2% this month, after falling slightly last month.

 

It means that the average asking price for a UK property now stands at £319,996, which is 5% higher than a year ago.

 

Official house price data, based on prices paid for homes, show a 3.4% rise in the year to June, which suggests the asking price data is fairly accurate.

 

Homes with three or four bedrooms were the most popular.

 

Tim Bannister, Rightmove’s director of property data, said:

 

“Needing more space has always been the most popular reason for moving house, but now there’s a new urgency for extra space to be able to work from home.”

 

“Buyers are competing for the same type of property. At the start of the year a fourth bedroom was very much a luxury for buyers trading up, but it’s now emerging as a must-have for those who are able to take that step.”

 

Looking ahead, fears over the state of the economy and job losses could temper further house price growth.

 

The end of the government’s stamp duty holiday next April might also depress transaction volumes, although we could see a slight surge in completions ahead of this deadline.

 

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