August Valuations Market Weathers Olympic Period

The valuations market saw a seasonal dip in August although activity continued to climb annually according to the latest Housing Market Activity Report by Connells Survey & Valuation.

The total number of residential valuations conducted by Connells during the month fell by 10% compared to July. However, despite the drop, activity remained higher than a year ago, with 1% more valuations than in August 2011.

John Bagshaw, Corporate Services Director of Connells Survey & Valuation, comments: “The housing market is traditionally slower in August, and this year proved no exception as the summer holiday season took its toll on the number of buyers looking to move. This seasonal drop-off was exaggerated by the Olympic focus, on top of the ongoing squeeze on lending, although this was not as great as many had expected.

“However, it is encouraging that despite the monthly dip, valuations activity remained higher than a year ago, and is already showing signs of bouncing back in September despite the difficult borrowing conditions.”

The growing buy-to-let sector was a key driving force behind the annual climb in valuations, climbing by 31% on an annual basis.

John Bagshaw continues: “Buy-to-let is playing an increasingly significant role in the housing market, as investors are drawn in by the prospect of rising rental income, subdued purchase prices and increasing demand from tenants. Lenders have been cutting rates to tap into this demand, and the combination of rock-bottom mortgage payments and soaring rents has made property investment increasingly attractive.”

Remortgaging activity saw a smaller dip than the wider market, although it fell by 7% on a monthly basis and by 1% compared to last August.

Bagshaw says: “The unlikely prospect of a base rate rise is limiting remortgagors’ sense of urgency, and many borrowers are still sitting on their lender’s SVR. But we are starting to see even cheaper mortgage rates filter through, a trend that is likely to continue as lenders make use of the Funding for Lending scheme. This could well increase the number of borrowers looking to lock-in to longer term, cheaper deals on offer.”

Home movers saw the biggest dip in activity in August, with valuations falling by 15% compared to July. This represented a 7% annual fall. First-time buyer activity also declined in the month, down 9% on July, although this was only a 1% fall from August 2011.

John Bagshaw concluded, “For those able to provide big enough deposits, there are exceptionally cheap mortgage deals available. But the problem lies at the other end of the market. The tightening availability of affordable high LTV products and lenders’ tight credit requirements continue to place downwards pressure on first-time buyer activity, reining in valuation activity for home movers higher up property chains.”

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Olympics Fail to Bring London’s Property Market to A Standstill

While the distraction of the Olympics took its toll on speculative buyer demand, sales activity actually improved during the Olympic period, according to the latest figures from London estate agent Marsh & Parsons.

The impact of hosting the Olympics failed to derail London’s sales market, as determined buyers took advantage of quieter streets and roads to secure properties ahead of the traditionally busier month of September. Between the 27th of July and the 12th of August, the number of property sales agreed by Marsh & Parsons rose by 23% compared to the same period last year. The number of sales agreed was also 35% higher than during the same 17 day period in 2010. 

The improvement in sales agreed came despite a substantial reduction in the number of buyers registering. In the Olympic 17 days, there were 30% fewer buyers registering than in the same period a year ago. In turn, there was a 22% reduction in the number of viewings compared to last year, with many speculative buyers opting to avoid feared congestion in central London until the end of the Olympics, or distracted by the Games.

Peter Rollings, CEO of Marsh & Parsons, comments:  “While many potential buyers were glued to their TVs and seats at venues rather than out viewing homes, London’s housing market didn’t grind to a halt by any means. The traffic chaos and logistical problems feared in the run up to the Games thankfully failed to materialise, and a corps of committed buyers moving with urgency actually took advantage of quieter streets to secure homes. In fact, with roads emptier than usual for this time of year, buyers actively looking to purchase homes ahead of the traditionally busier post-summer holiday period found getting to and from viewings a much smoother process.”

With the Olympics serving to provide incredible global publicity for London, showing the city in its best possible light, we expect it will have a significant long-term impact on its appeal as a place to live for both domestic and international buyers.”

Calm Olympic London attracted prime homebuyers, says County Homesearch

A deserted central London had an unexpected boost to viewing figures for the capital’s prime homes, according to County Homesearch Company’s London branch, as homebuyers took advantage of emptier roads and a less crowded public transport system.

According to a research report from Experian, the number of people going to stores on Friday ahead of the opening ceremony was 10.4% lower than a year ago* and heralded a quiet two weeks in London. 

Jonathan Haward, Chairman of County Homesearch Company comments:

“Many people feared that the Olympics would bring chaos to the capital and had put their property searches on hold until early September. However, with fewer cars on the roads and quieter trains, homebuyers changed tactics and made the most of the much reported calmer conditions, with the result that viewings for properties in prime central London increased by 25 per cent. While there are fewer properties on the market, those selling are still keen to tie up a deal before the end of the summer so savvy buyers may reap more than one benefit from the Olympic lull.”

*Experian report 2012

Wriglesworth Paper Summary – 16th May 2012

Economics

The Express says the UK government is powerless to stop our continental neighbours from destroying the last remnants of their prosperity – but David Cameron should tell the bickering participants in the Eurozone to either make up or break up.  But City AM’s Allister Heath says Greece will quit the euro and that it’s time to start preparing for the Grexit.  He says the UK governments’ sole mission should now be to protect UK taxpayers.  The Sun says George Osborne can no longer blame eurozone woes for our double-dip recession; the cuts are not enough – he must get Britain moving!  Like the Express, The Mirror also urges the Greeks to deliver a decisive verdict: if they’re in or out of the euro; and if they are for or against austerity.

Personal Finance

Million of older workers face poverty in retirement as they look set to have less than the minimum wage as their pension according to Sarah O’Grady in the Daily Express.
Property

Although it’s a light day in the national papers for property stories, the Scottish papers report LSL Property Services Scottish House Price Index extensively.  Both the Scottish Daily Express and The Scotsman report a surge in first time buyers pushing up prices – those stories are on page 2 and 3 respectively.

Recruitment

The Mail dedicates it’s editorial to an attack on working from home – the astonished that civil servants are to be allowed to work from home for two months during the Olympics.  Still focusing on the public sector, The Sun reports public sector workers take sixty per cent more sick leave than employees in private firms.  Elsewhere, we can expect UK unemployment figures today.  Last month unemployment was shown to have fallen for the first time in almost a year, by 35,000 in the three months to February to 2.65 million, while the unemployment rate was 8.3pc.  The number of unemployed 16 to 24-year-olds fell by 9,000 to 1.03 million.  In the FT, Liam Fox argues the reason Germany has lower unemployment than the UK, is because it has a more deregulated jobs market (in the UK, the cost of defending dismissal claims cost business £1.6bn in 2010), has improved its education system, and managed the cost of childcare better.  He says that sadly, these reforms are anathema to many Liberal Democrats.