Total activity in the UK housing market has grown by more than a quarter during 2015, according to the latest research from Connells Survey & Valuation.
The total number of housing valuations carried out in December 2015 was 29% higher than in December 2014. This figure also represents an improvement on annual growth in valuation activity compared to a year ago, up from 9% growth between December 2013 and December 2014.
This strong annual progress comes despite a seasonal contraction into the winter. Between November and December 2015, the valuations sector as a whole contracted by 17%, in line with previous historic dips in the housing market into the festive month.
John Bagshaw, corporate services director of Connells Survey & Valuation, comments: “For the housing market 2015 has been a year of significant progress, even if at times growth has been spread a little unevenly. December has traditionally been a quiet month for the property ladder as people’s thoughts – and spending power – are focused on Christmas. The monthly dip in total valuation activity may raise some eyebrows, but it’s a reflection of the pattern we’ve seen over previous years.
“More significantly, the whole property market has enjoyed a strong annual performance. There is a steady confidence in the market that wasn’t present in 2013, or even 2014. December’s results are also a reflection of the ever-increasing demand for homes as investment opportunities, as buy-to-let landlords join home movers seeking to make some sort of profit from their property. The housing market is in a strong position as we head into January.”
Annual growth in overall valuation activity has been largely driven by the performances of the buy-to-let and remortgaging sectors.
Between December 2014 and December 2015, the number of valuations conducted for buy-to-let properties soared by 86%, while, over the same period, valuation activity among those looking to remortgage rose by 34%.
However, in line with overall seasonality, both sectors experienced more subdued month-on-month activity, with the remortgaging sector seeing its numbers contract by 14% between November and December 2015. Meanwhile, the number of buy-to-let valuations saw a slight 1% dip over the same period.
John Bagshaw continues: “In an environment of competitive mortgage rates and strong demand for rental property from tenants, the buy-to-let sector is always going to be a popular option for investors with the time to devote to being a landlord. However, the added factor of the April 1st Stamp Duty increase has spurred many investors who might have been sitting on the fence to take the plunge and enter the buy-to-let market before its profitability takes a hit.
“The remortgaging market has typically been a strong performer over the last year. Home owners who lack the desire to take the risk and move are opting instead to remortgage in order to release capital on their home to use towards home renovations – improving rather than moving. For others remortgaging is more purely about switching to a better deal. A Bank of England rate rise now looks very likely at some point in 2016 – especially considering the US Federal Reserve has already raised their base rate. Many remortgagors realised this and, like buy-to-let investors, opted to take advantage of favourable borrowing costs while they lasted.”
In December 2015, valuation activity in the first-time buyer market grew by 19% compared to the same month in 2014, representing more than triple the annual growth rate of valuations for established home movers, which increased in number by 6% over the course of 2015.
However, the first-time buyer and home mover sectors were also affected by the seasonal downturn in the property market, with December first-time buyer and home mover activity falling by 23% and 22% respectively on a monthly basis.
John Bagshaw concludes: “First-time buyers and home movers appear to have traded places over autumn. Until then, it was the first-time buyer sector which experienced cautious growth, while the home mover sector enjoyed a healthy uptick. Now it’s the other way around.
“This is a positive sign. It demonstrates that first-time buyers finally feel they have enough support, both from the Government and the wider economy, to leave rental accommodation behind and take their first step on the ladder. They, like the wider housing market, ended 2015 on a high.”
