The total number of valuations conducted during December declined by 14% on a monthly basis, a much smaller fall than the average drop of 20% between November and December since 2007.
The robust December performance contributed to increased demand for valuations in fourth quarter of 2011 as a whole with activity up by 3% compared to the previous quarter an up 71% compared to the fourth quarter of 2010. In fact, throughout the whole of 2011, there were 43% more valuations than in the previous year, the report shows.
‘The seasonal Christmas slowdown may have set in during December, but the monthly dip was much smaller than in recent years. Better than expected lending figures as banks and building societies hurried to meet full year targets helped drive the annual increase in valuation activity in the run up to the new year , a welcome contrast to the situation last December, which saw a dismally low level of lending,’ said John Bagshaw, corporate services director of Connells Survey and Valuation.
Strong activity from both first time buyers and home movers helped boost activity in the final quarter of the year. There were 9% more valuations for first time buyers than in the previous quarter, an annual increase of 56%. Similarly, valuation activity for home movers grew by 6% on a quarterly basis, a 61% increase compared to the final quarter of 2010.
‘The final month of the year tends to be fairly sluggish, but resilient first time buyer demand has cushioned the typical seasonal downturn. We are starting to see first time buyers with finance act with a greater degree of urgency to move before the end of the stamp duty holiday in March. This should filter up property chains, helping bolster spring activity,’ explained Bagshaw.
Although remortgaging activity grew more steadily in the final quarter of the year compared to the previous quarter, up 3%, it was double the level seen in the fourth quarter of 2010, albeit from a low base. In 2011 as a whole, Connells Survey and Valuation conducted twice as many valuations for remortgagors than in 2010.
Buy to let activity also increased annually, rising by 83% compared to the fourth quarter of 2010, despite a quarterly fall of 11%.
‘Growing remortgaging and buy to let activity were key to the resilience of the mortgage market last year, and this is likely to be the case as 2012 progresses. Although the eurozone crisis may impede lenders from drastically growing their loan books, tenant demand and rents will remain strong, enticing new investors to the sector,’ said Bagshaw.
‘With the ongoing crisis also impacting on banks’ funding costs, remortgaging is likely to increase in popularity as borrowers look to take advantage of cheaper longer term options before the cost of new products rise,’ he added.
