The mortgage market recovery continues apace but while property values and activity remain on an upward trajectory Rightmove’s August house price index delivered the first dip we’ve seen in a while.
Admittedly, new sellers’ asking prices only dropped by 1.8% (or £4,459) but this is the first reduction we’ve seen in 2013.
Placing this in perspective is the fact that asking prices are 5.5% higher than a year ago and August is traditionally a quiet month for the property market as summer holidays take precedence over selling houses and arranging mortgages.
If anything, 1.8% is a relatively modest reduction for this time of year, so this slight checking of progress shouldn’t serve to stall momentum.
A number of factors have converged to create the current confident climate, from record low mortgage rates to the government initiatives and rising consumer optimism.
It’s great to see first-time buyer activity levels at their highest point since before the global financial crisis and that RICS recently reported that house prices were rising at their fastest pace since 2006.
But while the nation’s obsession with house prices continues to dominate the headlines, a statistic that has more bearing on future movements but has garnered slightly less coverage is the news that house starts increased by 6% in the second quarter.
For all the help that schemes such as Funding for Lending and Help to Buy have been (and will be) Britain’s shortage of housing stock has long been the fly in the ointment.
The Q2 increase is still way short of where we need to be but it is evidence that we are finally heading in the right direction after years of construction sluggishness.
Indeed, for all that the current rate of construction may seem desperately slow it is still 73% higher than at the market’s trough in 2009.
What the nation really needs is a long-term housing strategy that can comprehensively address the shortfall.
But for as long as successive governments continue to treat the property market as a means for political point-scoring rather than as an issue in dire need of resolution than the situation is likely to rumble on.
In the meantime, key stakeholders will have to console themselves with the fact that things are trending in the right direction and that the number of Help to Buy reservations should help underpin continued improvement this year and next.
One thing that is for sure is that the mortgage and property markets will have to learn how to become more independent and less dependent on State intervention if the current recovery is to last.
Given the level of assistance at present, the current buoyancy is artificial to some extent.
Although all the signs in the mortgage market are positive– and the recent entry of some new lenders is a welcome development – it is only when banks truly regain their appetite and start displaying some real innovation and willingness to lend at higher loan to values that we can regard the renaissance as genuine and sustainable.
