February thaw brings bounce to housing market

The housing market renewed its pace of recovery in February after subdued growth in January, with the number of valuations on residential housing growing 61% compared to the previous month, according to research by Connells Survey and Valuation.

The positive trend of year-on-year increases also continued, with the number of valuations conducted in February up by 22 per cent on the number a year ago. Activity has now grown year-on-year for six months in a row.

Ross Bowen, the managing director of Connells Survey and Valuation said: “Traditionally, the valuations market begins to see a boost in activity in January following the Christmas lull. January witnessed a hangover from re-instating the lower stamp duty threshold while the arctic weather conditions disrupted some buying activity. However, February saw househunters back on to the streets in force, with activity bouncing back as a result.”

The increase in activity has been fuelled by first-time buyers. In February, 63 per cent more first-timers requested a valuation than in January – boosting the number above levels seen a year ago. There was also a substantial month-on-month rise in valuations conducted for current homeowners looking to move.

Ross Bowen said: “In January, we saw first-time buyer activity drop off slightly compared to December. Many first-timers had rushed to make their transactions before stamp duty holiday ended. In February, demand bounced back. Consumer confidence has been buoyed by nine months of rising house prices, and more and more people are considering buying a home. Homeowners have seen their properties reclaim much of the value lost during the downturn. Many who previously delayed see now as the right time to move properties.”

Remortgaging and buy to let activity also surged upwards – valuations for buy to let investors rose by 81 per cent, and remortgaging levels doubled compared to January. However, this was from a low base. With mortgage finance conditions still difficult, remortgaging valuations were less than 30 per cent their level in February 2008. Buy to let was 30 per cent lower than 2008.

Bank of England figures released yesterday showed the number of approvals for house purchases dropped to 48,198, the lowest since May 2009 and lower than the consensus expectation of a fall to 50,000 in January from 58,223 in December. The revised data show that the number of mortgage approvals has yet to return to 60,000 per month, having averaged over 100,000 per month during the three years to 2007.