Growing demand for smaller homes

The latest Rightmove House Price Index has revealed a growing demand for houses with two bedrooms or fewer.

Rightmove revealed that the greatest gap between buyer enquiries and the number of properties available is for smaller homes, with 24% more enquiries for smaller properties than for homes with three bedrooms or more. It's not just first-time buyers who favour these houses; they're also popular among downsizers and buy-to-let investors.

The property portal said developers now face a "quandary" on how to deliver more smaller homes, when larger homes tend to offer greater profit margins and attract more comfortable buyers.

Rightmove director Miles Shipside said: "Improving affordability requires the creation of more homes of the right type and in the right place, resulting in increased churn and more pricing competition. The challenge is to identify what is in demand and in short supply and build more of it."

Asking prices

For the second month in a row, the average asking price for property has reached a new record high. The average asking price is now £294,542 - that's £191 (0.1%) higher than June, and represents a jump of more than 5% on last year.

However, there's also been a "sharp drop" in number of properties being put up for sale, emphasising the current housing crisis.

Fewer are buying because of the struggle to afford record asking prices, coupled with a "seasonal summer slowdown". That said, the same period this time last year saw a 0.6% fall in house prices, suggesting an annual decrease in activity during the summer months.

Compare mortgage rates