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; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicReview: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
News
peopleJustin Bieber accuses papparrazzi of acting 'recklessly' after car crash
Life and Style
tech
PROMOTED VIDEO
News
people
Voices
voices
Sport
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
News
i100
Life and Style
tech
News
Ukrainian Leonid Stadnik, 37, 2.59 meter (8,5 feet) tall, the world's tallest living man, waves as he poses for the media by the Chevrolet Tacuma car presented to him by President of Ukraine Viktor Yushchenko in Kiev on March 24, 2008.
newsPeasant farmer towered at almost 8'5'' - but shunned the limelight
News
Walter Matthau and Jack Lemmon in ‘The Front Page’, using an old tech typewriter
media
Life and Style
Could a robot sheepdog find itself working at Skipton Auction Mart?
techModel would allow robots to be programmed to control crowds and save people from burning buildings
News
i100
Arts and Entertainment
Suha Arraf’s film ‘Villa Touma’ (left) is set in Ramallah and all the actresses are Palestinian
film
Sport
Angel Di Maria poses with Louis van Gaal after signing for Manchester United
sportWinger arrives from Real Madrid and could make debut on Saturday
Arts and Entertainment
Kingston Road in Stockton is being filmed for the second series of Benefits Street
arts + entsFilming for Channel 4 has begun despite local complaints
Arts and Entertainment
Hooked on classical: cellist Rachael Lander began drinking to combat panic attacks
musicThe cellist Rachael Lander’s career was almost destroyed by alcohol she drank to fight stage fright. Now she’s playing with Elbow...
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Client Services Executive / Account Executive - SW London

    £23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

    PA to CEO / Executive Secretary

    £36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

    Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

    £25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

    Senior C# Developer (.NET, C#, JMS, TDD, Web API, MVC, integrat

    £45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...

    Day In a Page

    Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

    Kate Bush shows a voice untroubled by time

    A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
    Robot sheepdog technology could be used to save people from burning buildings

    The science of herding is cracked

    Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
    Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

    This tyrant doesn’t rule

    It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
    Rachael Lander interview: From strung out to playing strings

    From strung out to playing strings

    Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
    The science of saturated fat: A big fat surprise about nutrition?

    A big fat surprise about nutrition?

    The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
    Emmys 2014 review: Can they genuinely compete with the Oscars

    Can they genuinely compete with the Oscars?

    The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
    On the road to nowhere: A Routemaster trip to remember

    On the road to nowhere

    A Routemaster trip to remember
    Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

    Hotel India

    Mumbai's Taj Mahal Palace leaves its darker days behind
    10 best pencil cases

    Back to school: 10 best pencil cases

    Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
    Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

    Arsenal know battle with Besiktas is a season-defining fixture

    Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
    Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

    Pete Jenson: A Different League

    Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
    This guitar riff has been voted greatest of all time

    The Greatest Guitar Riff of all time

    Whole Lotta Votes from Radio 2 listeners
    Britain’s superstar ballerina

    Britain’s superstar ballerina

    Alicia Markova danced... every night of the week and twice on Saturdays
    Berlin's Furrie invasion

    Berlin's Furrie invasion

    2000 fans attended Eurofeurence
    ‘It was a tidal wave of terror’

    ‘It was a tidal wave of terror’

    Driven to the edge by postpartum psychosis