Housing market activity remains “resilient” despite the economic uncertainty surrounding the forthcoming EU referendum, new research shows.
According to Connells Survey & Valuation, valuation activity has increased 18% since May 2015, while on a monthly basis it is down by just 1% compared to April this year.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Compared to the gloomy picture painted by some, activity is looking remarkably resilient ahead of June’s housing market.
“Some month-on-month cooling could still be a result of stamp duty changes that came into effect at the start of April. However once that stamp duty-related instability has passed, there appears to be a steadier annual growth and a more positive outlook for the housing market. Even if the EU referendum does have a measureable impact, one thing is clear – any slump hasn’t happened yet.”
The remortgaging and first-time buyer sectors were the key drivers of annual growth in May’s valuation market.
On an annual basis, first-time buyer and remortgaging valuation activity went up 37% and 42% respectively.
May’s first-time buyer valuation activity fell back 8% on April, whereas remortgaging activity increased by 3% over the same period.
Buy-to-let
Following the increase in stamp duty there was a sharp fall in the buy-to-let sector, which was 38% down on April’s figure. The number of valuations for buy-to-let purposes has gone up by 8% over the past year.
The buy-to-let market has surged in recent years, with investors attracted by cheap mortgages, low interest rates and rising rents.
In April, a 3% stamp duty increase was introduced as part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
In the run up to the stamp duty hike there was a boom in borrowing as buyers brought forward transactions to beat the deadline.
Bagshaw said: “Remortgagors are leading the market, underpinned by lenders offering a new set of favourable interest rates for existing homeowners. But first-time buyers are also on the up. Factors such as low inflation, rising wages and government schemes are all helping new owners onto the property ladder.
“Even for the much-downplayed buy-to-let industry, May was a good month. Valuations on behalf of landlords have been leading the housing market since April. Annual growth is likely to stay negative for buy-to-let activity, but the most recent signs are positive.”
According to Paragon Mortgages, 41% of landlords rate their prospects in the next three months as being either good or very good. This is 2% down on the final quarter of 2015, indicating that falling levels of confidence may have stabilised.
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