Rightmove says sales of smaller homes – typically on the market as landlords sell up – are struggling.
The portal says the housing market generally has had a strongly positive start to 2025 but that is not the case for smaller-homes, typical sold by landlords and purchased by first-time-buyer.
Since Boxing Day, the number of enquirers in this sector is up by 8%, the lowest increase of all market sectors.
The portal believes stamp duty changes scheduled for April are to blame.
“Stamp duty charges rising for those buying above £300,000 will be a drag on the important bottom-of-the-ladder market in more expensive areas, unless some additional help for first-time buyers is announced soon” the portal announced this morning.
It also cautions that mortgage rates remain at unexpectedly high levels, which means that many buyers are not seeing significant affordability improvements.
Rightmove’s weekly mortgage tracker shows that the average five-year fixed mortgage rate is now 4.75% compared with 4.78% at this time last year. While the average two-year fixed mortgage rate has improved, it is still 4.97%, down only slightly on last year’s 5.08%.
There have been changing messages on how many Bank Rate cuts to expect this year, which are causing some uncertainty and will prevent some potential buyers from joining in the new year enthusiasm.
“Many buyers are still affordability-stretched, with high mortgage rates restricting borrowing power and limiting what they can afford to pay. Meanwhile, first-time buyers have seen support schemes reduce and some also face higher stamp duty fees from April, all while contending with record rents and trying to save up for a deposit” says the portal’s new spokesperson Colleen Babcock.
“Rightmove’s early-year snapshot shows a promising start to 2025. However, the market needs a boost for that momentum to be sustained, in the form of early and ongoing Bank Rate cuts, which should hopefully help to reduce mortgage rates. Some further support for first-time buyers would also be welcomed, particularly in more expensive areas of the country.”
And Matt Smith, mortgage expert at Rightmove, adds: “The message around how many Bank Rate cuts we should expect this year keeps changing, creating some uncertainty for movers. News of high government borrowing costs was swiftly followed by better-than-expected inflation figures, highlighting how quickly the mood can change.
“The markets are still banking on a cut in February, but after that it becomes uncertain. I think we’ll need to get settled into the year a little more before the direction of travel for rates this year becomes clearer.”