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Report shows pick up in UK residential property market

Residential mortgage valuation activity rose by 13% in the second quarter of the year compared the previous quarter, an increase of 29% compared to the same period of 2010.
The quarterly rise was driven by a surge in June. The number of valuations conducted during the month rose by 35% compared to May as summer buyers and an increasing number of landlords entered the market.
However, it was not just a seasonal rise. Total valuation activity was up 38% year on year. Although activity remains well below the level seen in 2007, it has now risen year on year for seven successive months.
The growing number of buy to let investors looking to buy properties boosted June’s level of activity. During the month, there were 47% more valuations conducted for prospective property investors, an increase of 90% on last year’s figure. One in ten valuations is now for property investors.

‘The buy to let market is going from strength to strength. Rents are at record highs in many areas, tenant demand is robust and yields are steadily climbing. With the increasing competition amongst buy to let lenders, many prospective property investors are looking to capitalise on an attractive market, which is driving up buy to let transactional activity,’ said John Bagshaw, corporate services director of Connells Survey and Valuation.

Home purchase activity during the month also improved. The number of valuations for home movers in June was up by nearly a quarter, 24% on the previous month, a slightly more modest rise of 18% compared to June 2010.

The number of first time buyers on the move also picked up in June, with an increase of more than a third compared to May, up 35%, some 25% more than a year ago.

‘There have been encouraging signs that the lower end of the market is starting to warm up. A small increase in the number of products for first time buyers has played a part as buyers look to take advantage of subdued house prices. But we are still operating in a market where transactions are at half the level of their historic norm,’ explained Bagshaw.

‘For all but the wealthiest would-be buyers, saving for the substantial deposits lenders require remains the key hurdle to clear when purchasing a home. Until lenders address this issue, transaction figures won’t climb back to anywhere near their normal levels,’ he added.

Although remortgaging remains below well below historic levels, in June Connells recorded almost double the number of remortgaging valuations than in June 2010, plus 99%, albeit from a very low base.
‘Recently, many mortgage holders have been enticed to remortgage onto a better deal by the drop in mortgage rates. With an increase in the Bank Rate seemingly off the cards anytime soon, money markets rates are falling and lenders are able to offer much more competitive mortgage products. Far from the stalling the remortgage market, the receding chance of an interest rate hike by the MPC has actually sustained remortgaging activity,’ said Bagshaw.