View more on these topics

Ben Thompson: A fair trade?

Ben-Thompson-MM-blog-250x255.jpg

Since the start of the year, house prices have started to increase. Rightmove’s latest house price index shows a 3 per cent year-on-year rise for England and Wales.

One of the major reasons given for this is the current sentiment surrounding property values, not just in the industry but from homeowners.

Our recent Mortgage Mood survey reveals 70 per cent of UK homeowners believe the value of their house is fair.

Prices are still significantly lower than they were at their 2007 peak. So why does the average consumer feel their current valuation is accurate?

Prior to the 2008 financial crisis, house prices were inflated. The present belief that homes are valued fairly highlights a more realistic idea of what “normal” is. 

People now feel they are getting value for money when they put their property on the market. This means more homeowners are willing to sell, increasing the availability of residential property and sparking the market rally we are seeing.

Rightmove’s latest figures support this, with sellers raising the average asking price by 2.1 per cent. Despite this increase, the gap between asking price and final sale price has actually reduced.

This has been bolstered by a rise in the number of buyers able to secure lending, thanks largely to the Funding for Lending scheme and Help to Buy initiative. 

This is all great news for the housing market. It is widely predicted house prices will continue to rise once the Government initiatives and market optimism bed in.

However, the results also show concerns around house prices are no longer at the centre of the recent market stagnation. An increase in the availability of housing and appropriate mortgage finance is needed if a sustainable recovery is to take place.

Value is down to supply and demand and as the demand for property increases, it is paramount that the issue of housing stock is addressed. Lenders also need to maintain product innovation to ensure that prospective new buyers are able to achieve their goal of homeownership.

The Government has made headway in confronting these issues but more needs to be done if the housing market is to return to dynamic and stable growth.

Ben Thompson is managing director of Legal & General Mortgage Club

Recommended

Barclays places around 750 ING Direct roles at risk

Barclays has placed around 750 ING Direct staff on consultation after completing its acquisition of the firm’s £10.9bn deposit book and £5.6bn mortgage book. Barclays will integrate both ING Direct books, which are now known internally as Barclays Direct, into its existing retail banking business over the next 24 months, meaning there will be duplicate […]

Industry warns auto re-reg for platforms is still a long way off

Although re-registration is a mandatory requirement for platforms, the goal of industry-wide automatic, in-specie transfers between platforms is still some way off. With the added complication of multiple share classes and the threat of preferential shares being given to individual platforms, re-reg is taking longer than expected. Money Marketing recently revealed platforms have clashed over the […]

1

David Shelton: Are there mass market opportunities for advisers?

Fay Goddard, in her last Money Marketing column as chief execuctive of the Personal Finance Society, demonstrated her usual clarity by dividing the future advice market into three parts. These were highly professional financial planning services, transactional based services and non-advised product sales. It is hard to argue with this analysis. There is plenty of […]

F&TRC appoints David Child as non-exec director

The Finance & Technology Research Centre has appointed Lifesearch non-executive chairman David Child as non-executive director. Child will take up the role on 1 May. He is also non-executive chairman of pensions technology business Dunstan Thomas. F&TRC managing director Ian McKenna says: “I have worked with David previously in a number of other organisations and […]

The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment