Skip to content

Pick up in first time buyer demand detected in UK property market

The total number of valuations conducted during the month grew by 3% in comparison to October, following a slight monthly dip in the previous month. However, the total number of valuations conducted by Connells Survey and Valuation in November represented an annual rise of 73%.

The pick up in first time buyer activity was a key factor in the increased level of mortgage activity in November. In November, the number of valuations conducted for first timers increased 7% compared to October. This represented 29% of all Connells’ valuations, the highest proportion since August. This bounce back follows a monthly decline to 27% of all valuations in October.
‘In November first time buyers exploited a short window of opportunity as rates for higher LTV mortgages improved briefly. With house prices steadily declining, affordability has improved for new buyers, many of those able to secure mortgages have been acting quickly to complete before Christmas,’ said John Bagshaw, corporate services director of Connells.

‘Following the Chancellor’s decision not to extend to stamp duty holiday for first time buyers, activity will be elevated in the short term as buyers look to move before March. But in the long term, the recovery of transactions will be led by lenders’ ability to unlock the lower tier of the market,’ he explained.

‘The new mortgage indemnity scheme is a step in the right direction but the threat of the Eurozone crisis combined with the abolition of the stamp duty holiday may undermine its impact in the coming year,’ he added.

Remortgaging activity was also vital to the improved valuations market in November. Over the course of the month, there were 12% more remortgage valuations than in October. This represented an annual increase of 92%, albeit from a low base. One fifth of all valuations conducted in November were for remortgagors, compared to 11% a year ago.

‘Lenders are showing signs of increasing product prices as Libor rates climb. Despite the record low interest rates, as banks find it harder to secure funding, mortgage rates are rising. As a result, current borrowers are increasingly looking to lock in to cheaper, longer term products to hedge against unexpected increases in their monthly mortgage costs,’ said Bagshaw.

The report also shows that demand for buy to let mortgage finance remains strong. During the month, there were 7% more valuations conducted for buy to let investors than in October. However, the number of valuations for home movers dropped by 8% in November compared to the previous month. Despite this, there were still 60% more than a year ago.

‘With the ongoing economic uncertainty, and constrained mortgage market, house prices have faced downward pressure in recent months, and this has reined in the number of vendors looking to place properties on the market,’ said Bagshaw.

‘However buy to let investors are seeing improving yields and many are looking to secure bargains before prices rise again. With a suppressed sales market providing strong demand for rental accommodation, and rents on the rise, an increasing number of investors with deposits see now as an excellent time to enter the buy to let sector,’ he added.