Connells Survey & Valuation reports that residential valuations are up 2% from last year and experts credit activity in the rental market for bringing up the average. Records show that valuations were the highest at the end of 2012 since before the onset of the global financial crisis in 2007 thanks in part to three months of consecutive increases in year-over-year comparisons. A dramatic increase in buy-to-let activity is the cause for the bump in numbers, but a slight increase in first-time homebuyers also contributed to the growth of the appraisals market. For more on this continue reading the following article from Property Wire.
Valuation activity in the UK residential property market grew annually for a third consecutive month in December, on the back of particularly strong growth in the buy to let sector, a new report shows.
The latest Housing Market Activity Report by Connells Survey & Valuation shows that the number of residential valuations conducted was 2% greater than a year ago. This improvement came despite the expected seasonal fall in activity, down 15% from November.
December’s annual growth contributed to stronger performance from the valuations market in 2012 as a whole, the firm said. The total number of valuations in 2012 was 12% higher than in 2011, the most annual activity since 2007.
‘2012 was the best year for the valuations market since the credit crunch began. We usually see the market pause for breath in December, and this was certainly the case compared to November. But three months of annual growth in valuations show how the mortgage market is now making steady, if still gentle progress,’ said John Bagshaw, corporate services director of Connells Survey & Valuation.
He pointed out that the annual rise in buy to let activity in December was pivotal to year on year growth in the wider valuations market. In the month, there were 22% more buy to let valuations than a year ago, despite a monthly seasonal fall. Over the whole of last year, buy to let activity grew by 33% compared to 2011 and represented 14% of all valuations in 2012, an increase from 12% of activity in 2011.
‘Buy to let was favoured more than anything else by conditions in the housing market last year. Alongside growing tenant demand and rising rates, buy to let borrowers, who tend to have substantial equity, have benefitted from Funding for Lending bringing down mortgage rates even further at lower LTV bands. With the gap between rental income and mortgage payments looking lucrative, demand from investors is likely to remain strong as the year progresses,’ explained Bagshaw.
First time buyers also had a positive December compared to a year before, another key factor behind the total annual growth. Valuations for first time buyers grew 11% from December 2011, in spite of a monthly fall of 10%. First time buyer activity has now grown on an annual basis for four consecutive months.
‘There were improvements in mortgage availability in the latter months of the year, but lenders’ criteria are still putting the brakes on serious progress. For first time buyer numbers to really build up any steam this year, more buyers without substantial deposits will need to be able to access the finance they need to leave the private rented sector and overcome a difficult saving environment,’ added Bagshaw.
Remortgaging saw a significant annual fall in December, with 16% fewer valuations compared to December 2011 after a 16% fall since November. Meanwhile, the number of valuations for home movers also dropped in the month, falling 15%, to leave the number of home movers 2% lower than a year before.
Bagshaw believes that his year, Funding for Lending will keep many mortgage rates low, but not all borrowers are benefiting. ‘In many parts of the country reduced equity is limiting the number of owners able to move or remortgage onto the cheaper rates on offer. It wouldn’t be only first time buyers who would gain from a greater availability of higher LTV mortgages. If this happens in 2013, it could be a great catalyst for the whole housing market,’ he said.
This article was republished with permission from Property Wire.