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
Saturday 14 September 2013
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
Authorities failing in hunt for 'most wanted' tax dodgers who owe HMRC £844m
How to protect your assets if the stock markets begin to head south again
A student's guide to financial survival: You don't have to drown in debt at university
You'll need £220,000 for a minimum wage in your retirement
10 tips for taking out a personal loan
- 1 Rice Bucket Challenge: India's take on the Ice Bucket Challenge 'for Indian needs'
- 2 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
- 3 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 4 Rubble Bucket Challenge: Ice Bucket Challenge adapted in solidarity with Gazans whose homes have been destroyed in conflict
- 5 Teenager dies after suspected ice bucket challenge goes horribly wrong
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Jeremy Clarkson is a cultural tumour and needs to be removed, says comedian Frankie Boyle
Air strikes? Talk of God? Barack Obama is following the jihadists’ script after James Foley beheading
- < Previous
- Next >
iJobs Money & Business
£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...
£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...
£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...
£45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony