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

Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
Mark Wright has won The Apprentice 2014
tvThe Apprentice 2014 final
Arts and Entertainment
X Factor winner Ben Haenow has scored his first Christmas number one
music
News
i100
PROMOTED VIDEO
News
news
News
Elton John and David Furnish will marry on 21 December 2014
peopleSinger posts pictures of nuptials throughout the day
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special
tv
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
News
Claudia Winkleman and co-host Tess Daly at the Strictly Come Dancing final
people
Extras
indybest
News
peopleLiam Williams posted photo of himself dressed as Wilfried Bony
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
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

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
    The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

    The 12 ways of Christmas

    We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
    Birdwatching men have a lot in common with their feathered friends, new study shows

    The male exhibits strange behaviour

    A new study shows that birdwatching men have a lot in common with their feathered friends...
    Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

    Famous diaries: Christmas week in history

    Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
    From noble to narky, the fall of the open letter

    From noble to narky, the fall of the open letter

    The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
    A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

    A Christmas ghost story by Alison Moore

    The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
    Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

    Marian Keyes

    The author on her pre-approved Christmas, true love's parking implications and living in the moment
    Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

    Bill Granger's Christmas Eve fish feast

    Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
    Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

    Rodgers fights for his reputation

    Liverpool manager tries to stay on his feet despite waves of criticism
    Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

    Amir Khan attacks the Taliban

    'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
    Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

    Michael Calvin's Last Word

    Sepp Blatter is my man of the year in sport. Bring on 2015, quick