There were 13% more property valuations conducted in April than a year ago, despite last month’s total dipping by 32% compared to March 2015, the data from Connells Survey and Valuation shows.
According to John Bagshaw, the firm’s corporate services director, all indicators from first time buyers right through to remortgagers are up on compared to a year ago and he said this demonstrates the broad momentum in the property market, which he expects to continue through into the new Parliament.
However, he pointed out that a less than clear election result could affect sentiment. ‘The latest monthly dip from March is generally a seasonal effect at this time of year so if this monthly slowdown continues further we’ll know that something has changed more fundamentally. Yet so far, there is no sign of a serious housing market slowdown,’ he said.
The data also shows that in April remortgaging outperformed the overall housing market, posting a 25% growth on the same month last year, overcoming a 34% seasonal dip from March.
Bagshaw believes that remortgaging is leading all other valuations activity, on the back of record low mortgage rates which are likely to stay low for some time. ‘Inflation is at zero and there’s little sign that the Bank of England will need to raise the base rate imminently. In the meantime mortgage rates have plummeted to the lowest level in over four years. Thus, many households may be capitalising on this period by refinancing to a fixed mortgage,’ he explained.
The buy to let market, while experiencing the sharpest month on month decline compared to other sections of the market, contracting by 36% in April, also saw the largest percentage growth from the same time last year, up 29% on April 2014.
Bagshaw said this could be due to talk of rent controls and three year tenancies. ‘Some would-be landlords are perhaps waiting to see whether and how these policies will be implemented before looking to invest further. Yet the long term picture is extremely positive,’ he pointed out.
‘Over the past year landlords have benefitted from a booming jobs market, which has led more people to move within commuting distance of work, thus increasing demands for rental properties in certain hot-spots. Equally, as real term wages pick up there has been an increase in the rental prices tenants are willing to pay,’ he added.
There has been a slower pattern of activity among first time buyers. The number of valuations carried out on behalf of new buyers fell by 33% since March, leaving first time buyer activity up 7% compared to the same month last year.
Moreover, activity on behalf of home owners further up the property ladder was only marginal. Valuations for established home movers contracted 27% compared to March and grew by 3% over the last 12 months since April 2014.
‘First time buyers have had bundles of extra support over the last five years but still not quite enough to power any serious growth in the number stepping onto the property ladder for the first time. This might disappoint some, especially with the plethora of government schemes to boost first timers,’ said Bagshaw.
‘Yet the greatest squeeze has been among those who already own their home who simply aren’t looking to upsize in the same way as might have been the case a decade ago. Householders might have said goodbye to the recession years ago, but the crunch on disposable incomes and aspiration to move to a bigger home might well last a decade,’ he concluded.
