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UK property market holding up, new report shows

The valuations market recorded its busiest April since 2007. As a result of the annual increase, residential mortgage valuation activity has now risen year on year for five successive months, the report shows.

As expected, despite the annual increase, April recorded an overall drop in the number of valuations conducted compared to March. Valuation activity dipped by 14% month on month, although much of this was directly due to the shorter working days in April, five (14%) fewer than in March.

‘April tends to be a trickier month for the housing market with the onset of Easter and the sheer number of bank holidays reducing the volume of buyers hitting the streets and looking to move,’ said Colin Dorman, business development director of Connells Survey and Valuation.

‘In spite of the added distraction of the Royal wedding and a month on month drop in remortgaging, the market performed resiliently, surpassing the level of activity of a year ago. We don’t expect the market to drop off any time soon. Pent up demand from buyers who postponed their house hunting in April is already trickling through,’ he added.

The report says that the annual increase has been largely driven by a strong increase in activity from property investors. In April, there were 43% more valuations conducted for prospective landlords than in April 2010, although this figure represents an 11% fall compared to March.

‘The buy to let market continues to pick up momentum as rents and yields for landlords go from strength to strength. Lenders are increasingly upping their level of lending to the buy to let sector, and many investors with sizeable deposits are taking advantage and are piling into the sector,’ explained Dorman.

Although the number of valuations for remortgages fell by nearly a quarter, 24%, compared to March, it remained 50% higher than a year ago, the report also shows.
‘With interest rates remaining on hold for the 27th consecutive month, there were fewer borrowers changing their mortgage, but this is temporary. This has filtered its way through to valuation activity, although levels remain in a much healthier state than a year ago. The arrival of higher rates over the months ahead will have a knock effect with remortgaging,’ added Dorman.

April also saw an encouraging increase in the number of first-time buyers entering the market compared to a year ago. There were one fifth more valuations for first time buyers, up 19%, than in April 2010. Homeowner valuation activity also increased compared to a year ago, increasing by 14% compared to April 2010, although this figure was down 6% compared to March.

‘The bottom line is that the housing and mortgage market is moving, albeit steadily. However, to build momentum it is crucial that lenders up their commitment to helping first time buyers on to the property ladder. While there are encouraging signs that banks and building societies are beginning to offer more attractive deals to some first time buyers, we need to see far more to match the strong demand from the UK’s would be buyers,’ Dorman concluded.