The UK housing market has started 2016 on a positive note as overall valuation activity in January rises by more than half on an annual basis, according to the latest research from Connells Survey & Valuation.
In total, the number of housing valuations carried out in January climbed 52% compared to January 2015. The figure represents the fastest annual uptick in total valuation activity since July 2015, when volumes rose by 57% on July 2014.
On a monthly basis, valuation activity across all housing sectors grew by 13% between December 2015 and January 2016.
John Bagshaw, corporate services director of Connells Survey & Valuation, comments “The UK housing market has shaken off the traditional seasonal slump that it typically experiences in December and is beginning to make progress once more. With the financial strain of the festive period behind them, buyers and remortgagors have the space and resources to focus their attention on climbing the property ladder again.
“However, it’s not just the disappearance of the festive slow down which is driving housing activity in January. With the April 1st Stamp Duty surcharge looming, many investors and second home buyers have begun the New Year eager to move up the ladder before this kicks in. The property market is also being buoyed by the recent announcement from the Bank of England that interest rates will be kept at rock bottom levels for the foreseeable future. So long as this remains true – and the general economic outlook stays healthy – acting sooner rather than later will seem the most sensible option to buyers and remortgagors.”
The buy-to-let and remortgaging sectors were the key drivers behind the strong growth of overall housing activity in January.
The number of valuations for buy-to-let purposes grew by 51% between January 2015 and January 2016, while the remortgaging sector soared by 97% over the same twelve-month period.
Both sectors experienced steadier performances on a monthly basis, with the number of valuations carried out for buy-to-let investors in January climbing 11% on the previous month. Meanwhile, January’s remortgaging activity represented a 12% dip on December 2015.
John Bagshaw continues: “Buy-to-let investors and remortgagors have enjoyed a busy start to the New Year. It might come as a surprise that there are still so many homeowners who are paying higher rates – and so are opting to remortgage – when rates have been so low for so long. But ultimately it’s a shrewd move – and one that is likely to remain popular with home owners so long as the Bank of England keeps rates at – or anywhere near – 0.5%.
“Buy-to-let investors are also continuing to flex their muscles. While many are hurrying to expand their portfolios before the Stamp Duty changes kick in in April, others are new-comers to the sector, who simply see buy-to-let as a good investment opportunity – regardless of the tax hikes and hurdles the Treasury throws at it. Nevertheless, we can expect the buy-to-let sector to reach a height of activity over the coming months, as some concerned landlords look to counter the effects of any measure that could hit their profit margins.”
Annual valuation activity among home owners looking to move grew by 27% in January, while between December 2015 and January 2016 there was a 15% uptick in the number of valuations for home movers.
Meanwhile, first-time buyers saw slightly more modest progress. Valuation volumes among those taking their first step onto the ladder in January grew 22% on an annual basis and 5% on a monthly basis.
John Bagshaw concludes: “After an understandably slow festive period, home owners are once again seeking to climb the property ladder in sizeable numbers. With 2016 maintaining the strong economic momentum – as well as the continuation of high LTV, low interest rate lending – it makes sense for home owners who feel they’ve outgrown their current property, to trade in order to upgrade.
“First-time buyers are also getting ever more confident. The volume of affordable homes being built is gradually increasing. This means the hunt for that ideal first home has become less daunting and more achievable. On the plus side, the Government has given no indication that it plans to scrap schemes such as Help to Buy anytime soon. However, some savvy first-time buyers realise these won’t last forever. They’ll be eager to take advantage of these schemes sooner rather than later. But overall first-time buyers – like remortgagors, home movers and buy-to-let investors – should be feeling fairly pleased with how 2016 has begun.”