Surging housing supply helps boost property market
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The abolition of Home Information Packs and the improving supply of property on the market helped to boost activity in June, according to the latest research by Connells Survey and Valuation
The number of residential property valuations conducted in June was 20% higher than in May, this represents an annual increase of 16%.
Valuation activity in the second quarter exceeded levels in the first quarter of the year by 9%. This positive trend was not a seasonal phenomenon. In the second quarter of 2010, there were 13% more valuations than the same period last year.
Change in the Number of Valuations Conducted
The strong performance of the valuations market in June has been underpinned by the increasing number of homeowners looking to move. The number of valuations for home movers was up 6% month-on-month – following a rise of 26% in May.
As a result, nearly a quarter more valuations were conducted in June 2010 compared to June 2009, +24%.
Ross Bowen, managing director of Connells Survey and Valuation, says: “Summer has brought a seasonal uplift in activity. But this has been exaggerated by the decision to discard HIPs. In June, there was a strong bounce in the number properties hitting the market and it’s not just speculative sellers testing the waters. Thousands of homeowners are no longer trapped in negative equity, and are looking to move up the property ladder.”
Despite the fears of a Capital Gains Tax hike, and the increase outlined in the budget, there was a strong annual improvement in the number of valuations for buy-to-let investors looking to add to their portfolios, +12%. Buy-to-let valuations also increased by 10% in June compared to May.
Bowen adds: “The increase in Capital Gains Tax should not have a significant impact on the buy-to-let sector. Although landlords were anxious that rates could be hiked as high as 50%, the rise wasn’t as severe as many anticipated. More buy-to-let mortgage products are trickling on to the market, and prospective investors are being driven by high tenant demand and strong rents – rather than being deterred by tax rises.”
The first-time buyer market did not show such strong progress. Although there was a seasonal increase in valuations, jumping by 36% compared to May – this was only a slight improvement on June 2009, +1%.
Remortgaging activity grew in June, despite the constrained lending market. Valuations for remortgagors increased by 30% month-on-month. This represents a year-on-year increase of 53% - albeit from a very low base.
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