NEWS
UK property valuations market bounces back
11-10-2012
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In September, the total number of residential valuations conducted by Connells rose by 30% compared to August. Despite the seasonal bounce, the total number of valuations in the month was 4% lower than in September 2011, although this is the first month in 2012 to see an annual drop.
On a quarterly basis, while total valuations were down 1% in the third quarter of 2012 compared to the previous quarter, they were still 1% higher than in the same three months in 2011.
‘The housing market tends to pick up pace in September, entering peak season as the school holidays end and buyers return from their summer hiatus. However, in the context of a sluggish summer, exaggerated by the distraction of the Olympics, the strong uplift in activity demonstrates the underlying demand from buyers despite continued challenges in the economic environment,’ said John Bagshaw, corporate services director of Connells Survey and Valuation.
Stronger first time buyer activity was a key component of this month’s overall increase, with these valuations up 38% on a monthly basis. However, the numbers of first time buyers also rose annually, climbing by 8% year on year.
‘First time buyers are the engine room of the housing market, and any increase in their numbers is to be welcomed. There are indications that higher LTV deals are becoming available, but it is still tough for the average new buyer to secure the finance they need,’ explained Bagshaw.
‘Lending criteria remain tight, and the growth is largely being driven by wealthier borrowers and those with substantial deposits. On top of this, meeting the cost of the reinstated stamp duty is adding a separate financial hurdle. To avoid the improvement in first time buyer activity being a flash in the pan, it’s vital that the government seriously considers proposals like the stamp duty break put forward by Labour to support the buyers who need help the most,’ he added.
Buy to let displayed the lowest month on month growth, with the number of valuations rising by 25%. On an annual basis, valuation activity was up 7%. Buy to let now represents 14% of the valuations market.
‘With mortgage availability still historically constrained for new buyers, the growth of the private rented sector is crucial to catering for the needs of the UK’s growing population. We need to see lenders continue to support the growing number of landlords who have been tempted to enter the market or expand their portfolios as a result of strong tenant demand and rising rental incomes,’ said Bagshaw.
Home movers showed a monthly increase in activity of 27%, although these valuations were 13% lower than in September 2011. Remortgaging activity fell by 12% on last September, despite a 29% monthly increase from August.
‘The fear of a bank rate rise has receded somewhat with the UK in a double-dip recession, and fewer borrowers are looking to remortgage than a year ago. However, with SVR rises like Santander’s starting to effect many borrowers’ repayments, we could see an upturn in the number of mortgage holders looking for cheaper deals and longer term security,’ he concluded.
