There was a strong lift in first time buyer housing activity last month, with 4% more mortgage valuations conducted compared to April, according to chartered surveyors Connells Survey & Valuation.
The total number of residential valuations conducted in May was up by 32% from a year ago. This is despite a fall of 1% from the previous month, representing a slight seasonal variation.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Activity in the housing market is accelerating. For eight months, we’ve seen consistent annual growth. By stark contrast, at this point last year some commentators were warning of a catastrophic Eurozone collapse and the chance that house prices would plummet by 50%. But that hasn’t happened, and moreover the possibility is receding.
“In 12 months, not only has the housing market rebounded, but activity is approaching levels last seen in 2007. The potential for further shocks remain, but every month that such positivity continues is another pillar in the solidity of this recovery.”
May’s increase leaves first time buyer activity 35% higher than last year. This also means that valuations for new buyers in May have reached 91% of the level seen in May 2007. As a proportion, first time buyers in May made up 33% of the valuations market, the first time this has happened since January.
Bagshaw said: “As Help to Buy starts to gain traction, first time buyers are finding the challenge of raising a deposit less of a barrier. Rates for first time buyers are getting better too, and that’s having an important effect on sentiment. Funding for Lending is having less of an impact at this end of the market, but the combination with much healthier balance sheets could be reaching a tipping point.
“Some lenders are still struggling, but increasing proportions are starting to compete for business once again, and that’s good news for new buyers.”
Remortgaging activity has grown by 46% on an annual basis and remortgaging now represents 19% of all valuations. This is despite a 6% monthly fall as part of the wider seasonal drop in May. Buy-to-let valuations also fell by 6% on a monthly basis, although compared to last year this activity has grown by 15%.
Bagshaw explained: “Lower rates aren’t just helping people who want to buy a new property or their first home. Established owner-occupiers who don’t necessarily want to up-size or down-size are making use of the latest deals, and saving significant sums every month. Buy-to-let investors are on a similar track, with many remortgaging existing properties to expand their portfolios, and many more making the most of some great deals to take out fresh mortgages.”
Home movers also had a strong performance in May. On a monthly basis, this activity remained steady, outperforming the overall figure. This leaves valuations activity on behalf of home movers at levels 28% greater than a year ago.
Bagshaw added: “Improvements in mortgage availability at higher loan to value ratios is even better news for anyone with existing equity. As house prices start to pick up, both growing buyer confidence and the reality of more net equity are having a very positive effect.”