Momentum shifts to buy-to-let
Buy-to-let valuations increased by a third (33%) year-on-year to May 2015 and by 3% from April, while first-time buyer activity fell by 13% year-on-year and 3% month-on-month.
Across the housing market as a whole valuation activity rose by 13% year-on-year and 3% from April to May 2015.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Britain’s buy-to-let market is booming right now as would-be landlords are eager to enter the sector and current landlords look to expand.
“However for first-time buyers, May was not just less positive than the rest of the housing market, but also disappointing in comparison to the previous month. Previously, valuations for new buyers had proved resilient in April, even when uncertainty about the impact of the election result on home-buyers was at fever pitch.
“The picture painted here is a consistent one. Fewer people looking to buy their first home means more tenants sticking to the rental sector. As such, new landlords enter the market and those already in the sector grow their business to capitalise on the increased demand. Yet what remains unclear is how long this contrast in fortunes will continue.”
The remortgage market also performed strongly, as valuations increased by 31% year-on-year and 9% from April to May 2015.
Homemover activity was steady, as valuations increased by 8% year-on-year and 4% month-on-month.
Bagshaw added: “Remortgaging is going from strength to strength right now. Record-low mortgage rates are the main reason for this, and with inflation still near zero and flirting with a negative reading, the Bank of England is likely to play it safe and keep rates at bargain-basement levels for the foreseeable future.
“Yet the recent cooling in home mover activity points at another cause for the remortgage rush. Increasingly, home owners are opting to upgrade the property they already have, be it through a loft conversion, conservatory or major face lift, rather than sell up and get a new one. In short, people are improving not moving.
“People feel financially secure enough to use their home as a guarantee against which to raise big capital – a sentiment that was absent for some time immediately after the crash. However, they still don’t feel the property market overall is safe enough to risk trading up what they already have.
“For a government reliant on movement further up the property chain to spur first-time buyer activity, these lacklustre homemover figures will both partially explain the disappointment of the poor first time buyer results, and compound the problems.”