Valuation activity hit a 12-month peak last month, as first time buyer numbers rose to their highest level for four years, according to the latest Housing Market Activity Report by Connells Survey & Valuation.
The number of residential valuations conducted by Connells in February showed a monthly increase of 27%. On an annual basis, total valuations activity grew by 23%, the fifth month in a row of annual growth.
“The wider economy might not be nurturing bright green shoots quite yet,” said John Bagshaw, corporate services director of Connells Survey & Valuation.
“However, for the housing market things are looking increasingly positive as a growing number of first time buyers feed into overall activity. While more severe weather in January could have delayed some activity in February, sentiment among buyers is improving. If last month’s trend continues, spring will certainly have sprung for the valuations market.”
First time buyer numbers in February were at a four year high as the number of valuations grew to its highest point in any month since March 2009. New buyers outnumbered those a year ago by 13%, with February seeing the sixth consecutive month of annual growth. Compared to January, February saw 25% more valuations on behalf of first time buyers.
Bagshaw said: “More affordable mortgage deals are starting to trickle through faster, due to increased competition at higher LTVs. According to Moneyfacts, lenders have introduced more than three hundred new mortgage products aimed at first time buyers since the start of Funding for Lending. Combined with increased traction from deposit schemes like FirstBuy and NewBuy, momentum is building inch-by-inch. However, lending criteria remain tight, and deposits must be easier to bring together if we’re to see more sustainable growth in new buyer numbers.”
Remortgaging activity in February was up 44% from the same point a year ago, after monthly growth of 33%. This brings remortgaging to just over one quarter of all valuations for the first time since January 2012.
Bagshaw said: “Current mortgage holders are the biggest winners from Funding for Lending so far. The greater bulk of new deals emerging due to greater credit availability are aimed at existing homeowners, with sufficient equity to help bolster lenders’ balance sheets. Previous months have seen the lowest levels of remortgaging for some time, but looking forwards that seems set to change. The only major obstacle could be high remortgaging fees which need to be weighed against the longer term saving.”
Home movers showed a 25% monthly increase in activity, contributing to 16% annual growth. Meanwhile, buy-to-let activity was 26% greater than in February 2012, mostly down to a 24% pick up from January 2013.
Bagshaw added: “Home movers saw continued progress, with a double digit boost in numbers from a year ago. Landlords and homeowners with equity looking to upsize are striking now, while prices are still below their past peaks in many parts of the country. “Equally, while there is substantial regional variation, in areas like London equity growth has meant that many are either cashing in or downsizing.
“Alongside this buy-to-let is making steadier progress, and looks like it’s set to do so for the foreseeable future.”