Housing market activity down in UK in May as fewer move home
Housing market activity in the UK stalled in May as valuations for home sellers fell from 45% to 27% due to fewer people moving, the latest data shows.
The research from Connells Survey & Valuation suggests that the mortgage market is currently being supported by remortgaging which now represents 23% of all valuations, up 2% month on month and a record for May.
The report says that a shortage of homes on the market, stamp duty impacts at higher levels and the extended economic uncertainty have discouraged home owners from moving on.
‘Fewer people are choosing to move home. The limited housing stock means that people already on the property ladder can’t see their next move in the market. After major votes and the economic turbulence of the past few years, many potential movers have adopted a near constant wait and see attitude,’ said John Bagshaw, corporate services director of Connells Survey & Valuation.
He believes that with the country now having a hung parliament heading into Brexit negotiations, the uncertainty in the market looks set to continue.
‘The long term increase in property values over the past seven years has reduced the financial incentive to move, with more homes slipping into the higher stamp duty bands. This means potential sellers could face a larger tax bill should they chose to move up the ladder when buying their next home, thus making it more difficult to free up housing stock to be used more efficiently,’ he pointed out.
The research also shows that while valuations from those looking to sell their home are down, remortgage valuations have risen by seven points when compared to the five year average for May.
Bagshaw also suggested that an increasing number of home owners are choosing to improve rather than move. ‘While rising long-term property values and political uncertainty have made moving home less attractive, they’ve driven up demand for remortgaging,’ he explained.
‘With homes worth more than they were five years ago and low interest rates on offer from lenders, many have taken the opportunity to refinance for a better deal. This should cut monthly repayments and provide some additional financial security to help home owners get through any potential economic uncertainty ahead,’ he added.