First time buyers have boosted annual growth in the UK’s housing market activity despite a seasonally quiet month of July, according to the latest research from chartered surveyors.
The total number of valuations carried out in July 2014 is 14% higher than in July 2013, according to the latest monthly report from Connells Survey & Valuation.
This is despite a seasonal slowdown of 21% compared to June and in line with an average 22% dip between each June and July since 2007.
Annual increases are led by first time buyer activity which is up 23% since July 2013, and with first time buyers showing the smallest seasonal drop off, at 17% from June to July.
According to John Bagshaw, corporate services director of Connells Survey & Valuation, a motoring economy is bringing with it renewed consumer confidence and emphasis on first time buyers from lenders, partly due to government schemes, appears to be getting people on to the property ladder.
‘We’re not on an open road to prosperity yet. After the summer slowdown, there will be more clarification on the long term impact of various potential speed bumps. The limiter could be interest rate rises or the fundamental squeeze on affordability for many would be buyers. But with consistent double digit annual growth in activity, there is now a growing sense that the housing market is running more smoothly,’ he explained.
Overall the report says that the number of valuations for those already on the property ladder has been more sedate. Home mover valuations number 12% more than in July last year, or around half the annual growth in activity among new buyers. On a monthly basis, the number of home mover valuations dipped by 19% between June and July.
‘Further up the chain the market is more muted. Plenty of householders are content to sit on an appreciating asset, often sticking with a mortgage they know. Jumping in the deep end just before interest rates change direction feels like a leap of faith. Despite this, some home owners, taking advantage of strong property prices, have used their added value to upsize,’ said Bagshaw.
Remortgaging activity in July is up 11% from July 2013. On a monthly basis the number of valuations for remortgaging purposes fell 25% since June, faster than the overall monthly drop. Due to this, remortgaging as a proportion of all activity has normalised, returning to the average 26% level of the last year, from 28% of all valuations in June.
‘A squeezed middle is still not feeling the full effect of recent good economic news with many choosing to rejig their finances. Particularly ahead of a rate rise many will be looking to catch the fixed rate train, even as lenders already start to price-in slightly more expensive funding over the next few years,’ explained Bagshaw.
The firm reports that buy to let valuations activity has increased 3% on an annual basis but between June and July it saw a 26% fall. This is in line with the average seasonal fall of 17% between June and July since 2007.
‘Buy to let activity often sees sharper seasonal dips than the rest of the market. Particularly over the summer, landlords are starting to concentrate on the upcoming busiest time of year for new lettings, rather than buying or selling properties. However, as annual increases attest, buy to let investors are taking advantage of the capital gains they have garnered and are still growing their portfolios on average,’ added Bagshaw.