Last month saw the UK housing market bolstered by remortgaging and buy to let activity, coupled with a sharp rise in property valuations, according a new report.

The latest data from chartered surveyors Connells Survey & Valuation shows that the total number of all property valuations were up 30% in June compared to May.

This expands on a more gradual month on month recovery of 3% in May, following a sharp correction in March and April.
On an annual basis, this leaves total activity at the same level as a year ago, with a 0% annual increase compared to June 2013.

According to John Bagshaw, the firm’s corporate services director, affordability is potentially a very real limiting factor for the housing market and it has been for some time. ‘Now, with the imposition of the Mortgage Market Review in April, alongside the latest note of caution from the Bank of England, the world of mortgages is revealing its fundamental link to household incomes,’ he said.

‘A rapidly improving economy with the prospect of real wage growth this year means that progress should continue. But we are now in a different phase of recovery, making new headway rather than just playing a rapid game of catch-up. This good news as there is now a sense of optimism that the housing market will be more stable and sustainable in the long term due to these developments,’ he added.

The report also says that remortgaging has formed the backbone of the monthly recovery, up 61% between May and June. In part this rapid growth can be attributed to making up ground lost in previous months, coming after a cumulative drop of 40% in March and April, and a very gradual 4% rise in remortgaging activity in May. However this still leaves remortgaging activity 10% higher than in June last year.

Moreover, as a proportion, remortgaging made up 28% of all valuations in June 2014. This is not just higher than the temporary low of 22% of all valuations seen in April, but also significantly above the average of 26% of all activity attributed to remortgaging in the previous 12 months.

Buy to let activity has also seen above average growth, seeing the same 10% increase since June last year. This follows 31% growth between May and June in the number of buy to let valuations.

‘It appears that some mortgage lenders have decided to refocus on remortgaging and buy to let. There are two aspects to this dramatic month on month growth; firstly that remortgaging was severely affected by the short term transition to the new MMR regime, and the temporary backlogs this created.

‘Secondly, a more subtle shift may have taken place. Pre-MMR there was a real focus on home movers and particularly first time buyers. But the latest noises from the regulator and the Bank of England seem to have put a cooler on riskier lending, especially at high income multiples. Equally, the expectation that interest rates might increase…