While the total number of residential valuations conducted during July rose by 8% compared to a year ago valuations fell 13% compared to June as the eurozone crisis continues to hamper the mortgage market.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “The UK’s mortgage market continues to feel the effects of the financial crisis across the channel and the ongoing economic recession. Lenders concerned about the impact of a deterioration in the eurozone have been concentrating on consolidating their balance sheets rather than new lending, putting the brakes on valuations activity.
“Nevertheless the launch of the Funding for Lending scheme could well breathe new life into the housing market as the year progresses. If lenders grasp the opportunity for cheap finance with both hands and pass this onto new buyers, we should see the housing market take a step towards recovery.”
Buy-to-let was the only section of the market not to shrink in July compared to the previous month with the number buy-to-let valuations also seeing an annual growth of 31%. As a result buy-to-let valuations now comprise 14% of Connells’ valuations up from 12% in June.
Bagshaw added: “The growth of buy-to-let comes as a side-effect of the historically subdued house purchase market. With far fewer first-time buyers than before the initial credit crunch, demand for rented accommodation is still growing, presenting investors with excellent conditions to achieve healthy yields. It’s no surprise that money is still pouring into buy-to-let and demand for finance is still climbing.”
And although first-time buyer figures fell by a fifth compared to June they remain 3% higher than in July 2011. The number of homeowners on the move also fell, dropping by 17% on a monthly basis and 1% compared to last July.
The number of remortgage valuations in July dipped by 1% compared to June, albeit rising by 18% compared to the previous year. Buy-to-let remortgaging comprised 26% of all remortgaging activity in the month.
Bagshaw said: “Remortgaging fell slightly compared to June but the remortgage market has come a long way in the last year. In many cases higher variable rates are still causing borrowers to consider their options while recent remortgaging figures have been buoyed by landlords looking to unlock funds to re-invest.
“We have also seen a flurry of attractive long-term fixed rates for homeowners with substantial equity just hit the market. As mortgage holders with lower LTVs start to take advantage, it should bolster monthly remortgage figures in the medium-term. However, it’s crucial that lenders do not forget about first-time buyers with smaller deposits. Any increased supply of cheap mortgages to these buyers will act as a catalyst for activity throughout the entire housing market.”
