Activity in the housing market remains strong despite referendum
Date online: 08/06/2016
Overall, the total number of housing valuations carried out in May 2016 was 18% higher than in May 2015, while on a monthly basis valuation activity in May decreased by just 1% compared to April this year.
John Bagshaw, corporate services director of Connells Survey & Valuation, comments: “Compared to the gloomy picture painted by some, activity is looking remarkably resilient ahead of June’s housing market. Some month-on-month cooling could still be a result of stamp duty changes that came into effect at the start of April. However once that stamp duty-related instability has passed, there appears to be a steadier annual growth and a more positive outlook for the housing market. Even if the EU referendum does have a measureable impact, one thing is clear – any slump hasn’t happened yet.”
Remortgaging and first-time buyer sectors continue to be stand-out areas of activity, as the key driver of annual growth in May’s valuation market.
First-time buyer and remortgaging valuation activity grew 37% and 42% respectively, when compared to May 2015. On a monthly basis, May’s first-time buyer valuation activity fell back 8% on April, whereas remortgaging activity increased by 3% over the same period.
The buy-to-let sector experienced the sharpest year-on-year decline compared to other sections of the market, contracting by 38%. However when compared to May 2015, the number of valuations for buy-to-let purposes has also seen the greatest percentage growth compared to April – up by 8%.
John Bagshaw continues: “Remortgagors are leading the market, underpinned by lenders offering a new set of favourable interest rates for existing homeowners. But first-time buyers are also on the up. Factors such as low inflation, rising wages and government schemes are all helping new owners onto the property ladder. Even for the much-downplayed buy-to-let industry, May was a good month. Valuations on behalf of landlords have been leading the housing market since April. Annual growth is likely to stay negative for buy-to-let activity, but the most recent signs are positive.”
There has been a relative steadiness of activity among home movers. The number of valuations for existing owner-occupiers seeking to move home in May grew by 9% over the last twelve months since May 2015 and contracted by just 1% compared to April 2016, in line with figures for total valuations activity.
John Bagshaw concludes: “Home movers have had a stable month and appear confident in the strength of the housing market and the value of their homes. Looking ahead, to the EU referendum and how the outcome will have an effect on the property market, the feeling from home movers will be an important measure of confidence in a time of uncertainty. But for the time being that doesn’t seem to have stopped thousands of households from electing to sell their current homes and consider an upgrade or a change of location.”