Julian Knight: A boom in house prices? What boom in house prices?

That is the question which many people outside London who can't sell their homes will be asking

House prices are rising at roughly twice the rate of inflation, and in some parts of the country (most notably London) we have the unwelcome return of gazumping and sealed bids.

We have Vince Cable, the maverick Business Secretary, warning that the Government's Help-to-Buy scheme is potentially fanning the housing market flames and the Royal Institution of of Chartered Surveyors calling for an unworkable 'cap' on house prices.

So this is a bubble, right? Wrong, not a bit of it. I will call a bubble when we get up to the sort of transaction levels we saw prior to the financial crash. The reality is that transactions are still barely two-thirds of the level they were six years ago.

In fact, take London out of the equation – and you should, as much of the market is led by foreign capital looking for a safety deposit box – house prices in the rest of the UK have actually declined by 19 per cent since 2005.

Of course there are exceptions to this, pockets where prices are expanding and there is understandably (considering the terrible rates of return on other investment classes) a rebirth of buy-to-let.

However, there are far more areas where it is still very difficult to sell your home.

Talk of a boom will seem strange to people in Newcastle, Manchester, Birmingham and Bristol who have had their properties on the market for a year or more without a sniff of a sale.

Speak to local agents and they still blame mortgage availability – or lack of it.

Now I think this is one of those catch-all excuses which doesn't quite get to the heart of the issue.

Lenders are still reluctant to lend as they once did, but this tends to come across in strict valuations and close examination of an individual's circumstances rather than outright refusal.

So when offers are made they can be underweight, something which used to be a regular occurence in the housing market during the 1980s and 1990s. Interestingly, mortgages have never been cheaper than now and if you are looking at a low loan-to-value product, have a good credit record and can support the loan then you are quids-in.

Where the real difficulty lies is in the simple arithmetic for buyers of incomes squeezed and a hangover of over-borrowing in the past.

In other words there aren't the buyers out there in a solid enough position to fuel any such boom outside of the capital.

There will be no chance of a housing boom until incomes start to accelerate away from inflation once again, and there is no sign of that happening.

In fact, one of the most striking things about our economy in recent years is the willingness of workers to accept pay restraint which in turn has kept more of their friends and neighbours in a job.

In my view, although the headline figures from the house price indices presage a boom and there is something to be said for the role of sentiment in all this, we are still a couple of years away from when we have to be seriously concerned.

It's the service that counts

I know I should get excited by seven-day current account switching which comes into being on Monday, but really I can't.

I am one of those people I'm afraid who took out my current account at 18 and hasn't switched since.

However, in the spirit of greater choice and flexibility for consumers, I do welcome that finally a decade and half after the internet came into all our daily lives the UK banking system is agreeing to facilitate a transfer within seven days – seven hours of course would be a much more realistic threshold.

What is going to happen now is that the banks are going to splash the cash on marketing to get your business.

They realise that by capturing your current account they have a much better chance of getting you to buy their loans, credit cards and mortgages where they make their margins.

Expect lots of incentives to switch, but beware: many of the most vocal banks after your business have poor customer complaint records according to the Financial Ombudsman Service.

After all, if you are like me what you want from your current account is that your finances run smoothly rather than an extra basis point on a linked savings account or a one-off cash incentive to get your business.

It is service which counts when it comes to current accounts.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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