August residential property valuation market weathers London Olympics
The valuations market saw a seasonal dip in August although activity continued to climb annually according to the latest Housing Market Activity Report by Connells Survey and Valuation.
The total number of residential valuations conducted by Connells during the month fell by 10% compared to July. However, despite the drop, activity remained higher than a year ago, with 1% more valuations than in August 2011.
‘The housing market is traditionally slower in August, and this year proved no exception as the summer holiday season took its toll on the number of buyers looking to move. This seasonal drop off was exaggerated by the Olympic focus, on top of the ongoing squeeze on lending, although this was not as great as many had expected,’ said John Bagshaw, corporate services director of Connells Survey and Valuation.
‘However, it is encouraging that despite the monthly dip, valuations activity remained higher than a year ago, and is already showing signs of bouncing back in September despite the difficult borrowing conditions,’ he added.
The growing buy to let sector was a key driving force behind the annual climb in valuations, climbing by 31% on an annual basis.
According to Bagshaw buy to let is playing an increasingly significant role in the housing market, as investors are drawn in by the prospect of rising rental income, subdued purchase prices and increasing demand from tenants.
‘Lenders have been cutting rates to tap into this demand, and the combination of rock bottom mortgage payments and soaring rents has made property investment increasingly attractive,’ he explained.
Remortgaging activity saw a smaller dip than the wider market, although it fell by 7% on a monthly basis and by 1% compared to last August.
Bagshaw believes that the unlikely prospect of a base rate rise is limiting remortgagors’ sense of urgency and many borrowers are still sitting on their lender’s SVR. ‘But we are starting to see even cheaper mortgage rates filter through, a trend that is likely to continue as lenders make use of the Funding for Lending scheme. This could well increase the number of borrowers looking to lock-in to longer term, cheaper deals on offer,’ he added.
Home movers saw the biggest dip in activity in August, with valuations falling by 15% compared to July. This represented a 7% annual fall. First-time buyer activity also declined in the month, down 9% on July, although this was only a 1% fall from August 2011.
‘For those able to provide big enough deposits, there are exceptionally cheap mortgage deals available. But the problem lies at the other end of the market. The tightening availability of affordable high LTV products and lenders’ tight credit requirements continue to place downwards pressure on first time buyer activity, reining in valuation activity for home movers higher up property chains,’ said Bagshaw.