In March, the total number of valuations carried out rose 8% year-on-year and grew by 21% compared to February of this year, according to Connells Survey & Valuation.
The firm said this was primarily due to the first-time buyer sector posting strong monthly and annual growth figures. In March, the number of valuations carried out for those taking their first step onto the property ladder increased by 41% compared to the previous month and 15% compared to March 2015.
The first-time buyer sector’s vigorous performance helped counteract a dip in buy-to-let activity in March, as the 3% Stamp Duty charge on second homes– that took effect on 1st April – drew near.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “March’s solid topline figure demonstrates the hardiness of the housing market, largely driven by first-time buyer activity. Increased determination on the part of this once-cautious sector, alongside a brightened economic outlook compared to a few years ago, have certainly been key drivers in activity.
“However a significant reason for the first-time buyer resurgence is the increased uptake of Government plans designed to assist the bottom of the market. The Help to Buy scheme has become more widely recognized and used by those who need a little help getting the capital together to fund a mortgage for a first home. Equally, more first-time buyers are taking advantage of special first-time buyer discounts on certain properties, which has helped those on lower incomes step onto the ladder. While first-time buyer confidence continues to flourish, there’s every reason to be optimistic about the path the housing market is on.”
Remortgagors and home movers have also seen a significant boost in valuation activity in March, which has kept the housing market on course in the run-up to the Stamp Duty change. Total remortgaging volumes represented an increase of a quarter (25%) on February 2016, as well as reflecting a jump of 33% on March 2015.
Home mover valuation activity grew by 4% in March on a year-on-year basis and leapt by 27% compared to the previous month.
Bagshaw said: “Those seeking to move up the property ladder are making solid strides this month. With home values high and continuing to increase across all parts of the country, albeit at an uneven pace, many property owners may view it as a good time to either upscale to something bigger and better or downsize and enjoy the surplus capital.
“The remortgaging sector has also enjoyed an energetic March. The rates of growth have come down somewhat from what we were seeing in previous months, as those looking to remortgage to fund a second home take a step back to re-assess and absorb the Stamp Duty changes. But with the average mortgage rate still very low – and no Bank of England rate rise on the horizon – many are taking advantage of the bargain rates in order to release capital on their home or switch to a better mortgage deal.”
The Stamp Duty changes, which became effective on 1 April, impacted the buy-to-let market in March. Valuation activity in this sector dropped by 27% between February and March 2016, as well as dipping by 36% compared to the same month a year ago.
Bagshaw added: “The buy-to-let market has endured a turbulent month but we expect this to be a short-term tumble, with investors adopting the standard-kneejerk reaction to legislative changes by proceeding cautiously. This is particularly true for a tax increase like the Stamp Duty shake-up. Many aspiring buy-to-let landlords may have realised that if they initiated a buy-to-let mortgage application in March, they would be unable to get it processed in time to beat the 1st April deadline. Instead, they may be taking their time in order to factor the changes into their financial planning.
“More importantly, the fundamentals of buy-to-let remain unaffected by the new 2% levy. Home values continue to increase while high LTV lending remains accessible, meaning investors can more easily take advantage of the capital returns on offer from the property market. Equally, demand for rental property remains strong and potential yields remain appealingly high. As the year progresses, these benefits will be the silver lining that outshines the short-term cloud in the buy-to-let sector that the Stamp Duty hike has created.”