Housing market activity in the UK remained healthy as overall valuation activity in May increased by almost a fifth on an annual basis, according to the latest research.
The data from Connells Survey & Valuation shows that the total number of housing valuations carried out in May rose 18% compared with the same month last year, while on a monthly basis valuation activity in May decreased by just 1% compared to April.
The month-on-month dip in valuations is likely to be a result of the stamp duty changes that came into effect at the start of April. But 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, according to John Bagshaw, corporate services director of Connells Survey & Valuation.
“Compared to the gloomy picture painted by some, activity is looking remarkably resilient ahead of June’s housing market,” he said.
Annual growth in May’s valuation market continued to be driven largely by the remortgaging and first-time buyer sectors.
Connells said that 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.
Unsurprisingly, the buy-to-let sector experienced the sharpest year-on-year decline compared to other sections of the market, contracting by 38%, following the introduction of a 3% stamp duty surcharge. 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%.
Bagshaw (above) continued: “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.”
The data also revealed that the volume of valuations for existing owner-occupiers seeking to move home in May grew by 9% over the 12 months since May 2015 and contracted by just 1% compared to April 2016, in line with figures for total valuations activity.
Bagshaw added: “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.”