The bottom sector of the market with two bedrooms or fewer has in recent years seen high demand from both first-time buyers and buy-to-let investors, creating upwards price pressure.
The average price of property coming to market is at another all-time high, up by £3,843 to a new record of £307,033, figures from Rightmove show.
The property portal put the rise down to the Chancellor’s autumn statement and announcement of the April buy-to-let stamp duty deadline which it said “created momentum which gave early impetus to the bottom of the market”.
It has also had the knock-on effect of energising the higher sectors of the market.
Miles Shipside, Rightmove director and housing market analyst, said: “This has contributed to April’s monthly rise of 1.3% being driven by growth in the second-stepper and top of the ladder sectors of the market, with the lower end of the market reporting a fall.
“The bottom sector of the market with two bedrooms or fewer has in recent years seen high demand from both first-time buyers and buy-to-let investors, creating upwards price pressure.
“The further demand boost from those looking to complete before1 April has now dissipated, resulting in a 1.4% drop this month in the average price of a property coming to market in this typical first-time-buyer/investor sector.
“However, the momentum it created looks to have enabled owner-occupiers of these properties to trade up. This has built an onward chain reaction of higher demand in higher price brackets as more people can move.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “The buy-to-let rush has caused a chain reaction in the housing market, driving house prices even further upwards this month and pushing the dream of owning a home further away from the grasp of many.
“The relentless increase raises the issue of affordability in this country, particularly in the south of the UK.
“In order to tackle this growing problem more homes need to be built in areas of high demand. To satisfy the needs of prospective borrowers, the industry needs to work together, to increase supply and ensure that much of the population is able to afford the home they want.”
Adrian Whittaker, sales director at New Street Mortgages, added: “Clearly competition in the housing market remains strong. Securing a property can still feel like a sprint against multiple competitors, and borrowers who are able to get ahead of the pack will find themselves in a better position to win the housing race.
“Lenders can make this much easier by streamlining the lending process in order to speed up mortgage applications and get consumers the funding they need, quicker.
"To do this, smart lenders are adopting the latest financial technology and using big data to conduct more accurate credit profiling, creating a faster, smoother and more consistent mortgage experience.”
