Strong demand for smaller properties has maintained the price of one- or two-bedroom homes, analysis from Hamptons shows.
Sellers of smaller homes are accepting offers closer to their asking price than they were pre-Covid, while the gap between asking and achieved pricing is lower than with larger properties.
While bidding wars are less common than last year for most homes, competition amongst buyers has increased for studio and one-bed properties, as 27% of studio and one-bed homes sold last month had three or more competing offers.
Aneisha Beveridge, head of research at Hamptons, said: “One of the early underlying trends of 2023 and a direct effect of higher mortgage rates has been strengthening demand for smaller homes.
“With affordability stretched, first-time buyers are buying smaller and so too are early downsizers with the aim to pay off their existing mortgage. This is supporting pricing for one and two-bed homes, while the larger family home market has cooled more over the last year given how costly it is to trade up.
“Most of our metrics are back to tracking 2019 levels and have continuously improved throughout the year as falling mortgage rates lifted confidence for both buyers and sellers. However, upward pressure on mortgage rates over the two weeks runs the risk of freezing some buyers out of the market. Although, rates are unlikely to return to their Q4 2022 peak which means that we don’t expect a significant change in the market in the months ahead.”
The average home in Great Britain took 49 days to sell in May, the longest time to sell in any May since 2013.
Larger homes took considerably longer to sell on average.
The average seller in England & Wales achieved 99.1% of their asking price in May, the highest share since October 2022.