The total number of property valuations for all purposes has fallen by 9% between February and March, leaving total activity at levels 10% below March 2013.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “March is usually a strong month for valuations, as the spring property market begins to heat up.
“But that just doesn’t apply this year. Lenders have had to devote serious time and resources, gearing up for a radically different way of assessing mortgage applications.
“This has rapidly fed through into the valuations industry, resulting in a sharp dip in the number of completed valuations.
“However, this hiccup looks like a one off. There remains a significant backlog of demand from all sections of the property market, and we expect to see steady growth in the number of valuations for all purposes over the rest of 2014.”
Valuations on behalf of established home owners looking to move saw only a very slight dip in activity – down by just 2% compared to February. This leaves home mover activity 6% lower than in March last year.
Meanwhile, activity on behalf of first time buyers fell more quickly compared to February; down by 7% month-on-month. This equates to an 11% fall in new buyer valuations since last March.
Bagshaw added: “When the final figures come in from the CML, there will probably have been slightly fewer first time buyers in March than might have been expected otherwise. But that doesn’t change the long term trend.
“Mortgage availability for first-time buyers is still improving, as more and more lenders shake off their fears about high LTV loans.
“The picture remains extremely optimistic for the rest of 2014. In fact ensuring that progress is made on an affordable and sustainable basis is vital.
“MMR can be seen as a necessary step towards a property ladder that’s reliable at every step.”
As a proportion, house purchase activity on behalf of new buyers and established homeowners both made up 31% of all valuations activity in March.
This is broadly the same as in February. However, remortgage activity has dropped off rapidly as a proportion of all activity, from 35% of all valuations in February to just 23% of activity in March.
This is due to a much sharper drop off in remortgaging in absolute terms. The number of valuations for remortgaging fell by 22% between February and March, causing remortgaging activity to fall 16% compared to March 2013.
Buy to let was the only sector to see more valuations in March than April, up 2% month-on-month.
However, this growth is slower than the seasonal increase seen at the same point last year, and buy to let activity in March remains 7% lower than in March 2013.
Bagshaw said: “Remortgaging is often seen as a great way to take control of the monthly bills. The latest low rates available for many households have been a big factor behind the growth of remortgaging.
“Moreover, any new trend towards less favourable mortgage rates should be even more of an incentive for households to fix their payments now before the best deals end.
“But after MMR, remortgaging will need to be done in a very different way – remortgage applications will often need to be treated with almost as much scrutiny as fresh loans.
“That shakeup for lenders is having a temporary but sharp effect on valuation volumes for remortgaging.”