A new report has indicated that May was another good month for the buy-to-let market, but first-time buyer activity fell once again.
Research from Connells Survey and Valuation shows that there were 33% more buy-to-let valuations conducted during May than at the same time one year ago. However, first-time buyer valuations fell by 4% over the same period.
Month by month, buy-to-let valuations rose by 3%, whereas valuations for first-time buyers dropped by 2%.
Ups and downs
John Bagshaw, Corporate Services Director of Connells Survey & Valuation, said that, ‘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.’ Bagshaw noted that, ‘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.’
Mr Bagshaw went on to say that, ‘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.’
Buy-to-let activity rises again in May
The data from Connells also shows that May was a good month for remortgaging, with valuations up by 9% in comparison to April. In addition, there was a 31% increase in the number of remortgaging assessments in comparison to May of last year.
Valuations for existing home-owners looking to move to a new property as opposed to remortgaging were up by 4% from April. This contributed to an 8% yearly rise in the number of home-owner valuations from May 2014.
Bagshaw observed that, ‘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 forseeable future.’ However, he went on to say that, ‘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.’
Mr Bagshaw feels that, ‘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. He went to say however, that people , ‘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 home mover figures will both partially explain the disappointment of the poor first time buyer results, and compound the problems,’ he added.