Post-poll recovery as housing market surges in May

Ross Bowen, the Managing Director of Connells Survey and Valuation said:

“The Election was a bit of a distraction for buyers. Housing market activity was slightly subdued in April, as many buyers waited for the Election. However, we’ve seen a strong post-Election bounce. House prices have continued to rise and consumer confidence continues to grow. While doubts still linger about the measures to be introduced in the next budget, the underlying fundamentals are in place for the recovery to stay on track.” 
                         
The increase in valuation activity has been driven by a pick-up in valuations from homeowners looking to move. The number of valuations for current homeowners was up by over a quarter compared to April – but by 54% compared to May 2009.

Despite a strong annual improvement in the number of valuations for buy-to-let investors (+35%), the number decreased in May compared to April, falling by 2%. 

Bowen says: “The market has been holding its breath to see how the new coalition would handle the housing market. Buy-to-let activity dropped off slightly in the past month. Despite signs that more buy-to-let mortgages are becoming available, many potential landlords are waiting to see exactly how changes to the Capital Gains Tax will affect them.

“Since HIPs were suspended two weeks ago, the number of sellers hitting the market has picked up – but it is still too soon to call the full impact of this change in policy.”    

First-time buyer activity in May was higher than April (+4%), but still down 5% on the same month in 2009. Remortgaging activity grew year on year rising by 63% – albeit from a low base. However, it dropped slightly month-on-month, falling by 5%, as the lending market remained constrained. 

Bowen concludes: “The housing market’s recovery seems firmly entrenched, and we are in much better shape than 2009. But, we are not in the clear yet.  The prospect of public spending cuts – and the rise in unemployment these may bring – looms on the horizon. We need to wait for the new budget to see how the new government will maintain the recovery’s momentum.” 

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