There was an annual increase in valuation activity in November after a strong performance from the buy-to-let sector, according to the latest Housing Market Activity Report by Connells Survey & Valuation.
The total number of residential valuations conducted by Connells in November was 3% higher than 12 months ago. This rise came despite a monthly fall in activity of 1%, although it was less than the average fall of 3% recorded between October and November over the past five years.
“November was far from a stellar month for the mortgage market by historic standards, but valuations activity saw annual growth for a second successive month,” said John Bagshaw, corporate services director of Connells Survey & Valuation.
“The seasonal monthly drift down we’d expect at this point in the year has been less pronounced than in previous years – although success has been confined to certain parts of the valuations market, with buy-to-let a star performer.”
There was a 14% rise in activity in the sector compared to October, leaving buy-to-let activity 18% higher than a year ago. Buy-to-let valuations made up 16% of the market, the highest level since 2007.
Bagshaw said: “Funding for Lending has changed lenders’ behaviour, and prospective landlords have benefited as a result. Cheaper credit from the Bank of England has so far mainly gone to lower LTV products, such as buy-to-let mortgages, due to the requirements on banks to simultaneously hold more capital.
“Meanwhile, investors are picking up on the severe lack of supply and strong yields in the lettings market, making good use of these cheaper mortgages.”
While first time buyer activity may have weakened in the month, down 8% from October, it was still 4% above the level seen a year ago. However in November first time buyers were responsible for the lowest proportion of valuations since March, when this figure was last as low as 30% of all residential valuations.
Bagshaw said: “The previous month saw a real improvement for first-time buyers, but this progress didn’t continue into November. With an overcrowded rental market, first time buyers are losing out as lenders keep tight mortgage criteria for the limited number of high LTV loans on the market, despite the Funding for Lending Scheme’s growing influence.
“The Autumn Statement was a missed opportunity to boost the lower end of the market. First time buyers would have welcomed a renewed stamp duty holiday for properties under £250,000, a move which would have provided new impetus to the market and taken the pressure off the success of the Funding for Lending Scheme.
“As things stand, unless lenders are able divert disproportionately more cheap funds to first-timers, the housing market’s recovery is likely be as slow as that of the wider economy.”
The number of valuations for home movers saw an annual increase of 7%, after a 2% increase from October. By contrast, remortgaging activity saw the largest annual falls in November, with 11% fewer valuations than in November 2011, and 5% fewer than October.
