Housing market activity robust despite summer lull
The total number of valuations conducted during July rose by nearly 47% compared to last July, despite a seasonal dip in activity. Compared to last month, there was a drop of 18% – although this was smaller than the 23% seasonal drop during the same period last year.
John Bagshaw, corporate services director of Connells Survey and Valuation, commented: “We tend to see a slight dip in activity each year in July as the advent of the peak holiday season takes its toll.
“In addition, lenders who have scrambled in June to meet their half-year lending targets may be reining their lending levels back in.
“But the seasonal dip has been less pronounced than usual, and we’ve had our strongest July in four years as buyers and property investors take advantage of the improving range of mortgage products on offer.”
Increasing purchase activity by owner-occupiers was a key driver in the annual increase in activity. The number of valuations for home movers in July was up by nearly a third (+32%) on the previous July. The number of first-time buyers on the move also picked up compared to July 2010, with an increase of more than a third (+34%), compared to a year ago year ago.
John Bagshaw continued: “The recent price war in the mortgage market has tempted many prospective new buyers onto the market, as well as enticing homeowners with substantial equity to take bigger mortgages and trade-up. On top of this, house prices have declined in most regions except London, and home purchase has become a more affordable option for those who have substantial deposits – rather than remaining in increasingly expensive rented accommodation.”
The growing number of buy-to-let investors looking to buy properties also boosted July’s level of activity. During the month, there were 75% more valuations conducted for prospective property investors than a year ago. With one in nine valuations for property investors, valuations for prospective buy-to-let landlords make up the largest share of the market since October 2010.
Remortgaging activity displayed the biggest annual rise, doubling in the past year (+99%) although from a very low base. On a monthly basis, it fell slightly by one fifth (21%).
John Bagshaw concluded: “The spate of attractive fixed rate mortgage deals in the last month has brought the average fixed rate down to its lowest level in 25 years. Although interest rate rises don’t seem to be on the horizon in 2011, many borrowers are moving now to lock in to a long-term, affordable deal while they are at such lows.”