But it is first time buyers who have faced the highest rises, with the data from property portal Rightmove showing that for this segment of the market asking prices increased by 6.2% month on month and 11.4% year on year.
In some areas first time buyers have seen prices rise even more with Croydon, Dartford and Luton recording an annual price surge of 18%.
Those moving up the housing ladder have fared better with second steppers seeing prices fall 0.8% month on month, but they are still paying some 8.1% more than a year ago.
The report points out that it was speculated that the investor activity drop-off after the April additional home stamp duty deadline would act as a brake on prices at the lower end of the market.
However, intense investor activity, with March transaction numbers up a massive 80% on last year, exacerbated the property drought in this sector and is now causing upwards price pressure. This resulted in prices for properties with two bedrooms or less, typical first time buyer homes, increasing.
‘If you were expecting a long period of price doldrums at the lower end of the market following the mass exit of the buy to let brigade, this month’s 6.2% price rise will come as a big surprise,’ said Miles Shipside, Rightmove director and housing market analyst.
‘Properties at the lower end of the market were the most common target for the investor community, and the immediate aftermath of the tax deadline saw new seller asking prices drop in this sector for just one month. The 1.4% fall reported in April’s index appears to have been a very short lived knee jerk, with an average price surge of £11,298 this month for properties coming to market with two bedrooms or fewer,’ he explained.
‘It remains to be seen if these prices can be achieved and there may be some over pricing in the market; it is also a reflection of better quality property coming to market in this sector which is now targeting owner-occupiers rather than landlords,’ he added.
He pointed out that since November when it was announced that an extra 3% stamp duty would be charged on additional homes and its implementation at the end of March, the price of property coming to market in this first time buyer/investor sector increased by 3%. In just four weeks it has now risen by 6.2%, the highest monthly rise recorded for this sector since February 2012.
The report also show that demand for typical entry level property remains high, with searches on Rightmove specifying two bedrooms or fewer being up by 47% in April compared to April 2015 in spite of waning investor interest.
In contrast, fresh supply for this sector is down by 1.5% in the last four weeks compared to the same period a year ago. While the price of a first home is accelerating, motivation to get on to the housing ladder is buoyed by the increasing cost of renting, better availability of mortgage products, and deposits gifted by family.
‘First time buyers are still eager to secure some of the very limited suitable supply in many parts of the country. Estate agents have perhaps been focused on getting investor sales through to completion before the tax hike, and some may have been surprised by the continuing momentum and scarcity of stock to meet ongoing demand,’ said Shipside.
‘The net effect is eye watering increases in asking prices in some towns, and is further stretching first time buyers’ affordability even though they are competing against fewer buy to let investors in the market,’ he added.
While the biggest increase in the price of property coming to market compared to a year ago in the typical first time buyer sector is in Croydon in Greater London, up by 18.6%. In regions outside London, but still very much in commuter belt territory, Dartford in the South East has recorded an 18.5% jump, with Luton in the East of England up by 18.4%. Agents report that all of these areas were the focus of considerable buy to let investor activity.
‘The country’s top price rise hotspot is Croydon, where Londoners priced out of some other parts of the capital have sensed a combination of convenience and value, aided by some serious regeneration,’ said shipside.
'Dartford has also been a very popular and affordable area for London buyers prepared to commute from the South East region and also good for rental yields for investors. With 5% less property coming to market in Dartford in the last four weeks compared to the same period in 2015, limited fresh supply is also a big factor. Luton has been a low priced town for some time with easy London access, and has now come into play in the past 12 months,’ he added.
Conversely, six out of 10 regions contain some towns which have seen falls in average asking prices, with the largest drops in Llandudno at 7.5% and Darlington down 3%.
‘Not all towns are seeing these annual hikes, for example a typical first time buyer home in Llandudno is down 7.5%, and Darlington is now 3% cheaper. The health of local economies have a big influence on demand and affordability, and consequently the amount you can ask for a property,’ Shipside concluded.