Godfrey Blight is a director at Capita Mortgage Services
Way back in time people thought that the world was flat. I have a feeling the world is ‘flat’ right now.
Something happened at the end of the summer, on a warm August evening with the barbeques all fired up. Suddenly, the euphoria of our economic recovery, booming growth, record levels of employment and roaring housing market seemed to evaporate.
The world went flat and there are many good reasons why: tensions in Eastern Europe, disease in west Africa and continued atrocities in the Middle East. Since the summer, the sparkling wine we were enjoying at those barbeques has lost some of its fizz.
The stock market has lost ground, many commodities – particularly oil – have lost significant value and, as a result, many countries’ currencies are weaker. Japan is back in recession, there’s talk of Europe going the same way…
The truth is our growth remains strong, inflation is low, employment levels are good and people are spending money but it does not feel quite like it did in the first half of the year. As ever the UK mortgage and housing markets were the first to show signs of a wobble.
Completely out of the blue, and taking most by surprise, the level of mortgage approvals fell back in August. Then the top fell out of the London housing market and, shock horror, prices started to fade. There have been some reversals of the trend since then but, by and large, the market has slowed, driven, I think, by a variety of global factors all coming to a head. But we have definitely stalled.
At a time when many budgets are at full stretch, the autumn statement offered some welcome relief for home buyers. The changes in stamp duty – going from a slab to graded structure – is a fairer and more proportionate system than its predecessor. Almost all buyers will be better off under this re-classification. Maintaining the growth impact of the housing and manufacturing sectors is fundamental to the UK’s economic recovery.
There’s hope that these reforms will give that flat feeling a shot in the arm and that there’ll be fizz in time for Christmas and the party season.
Let’s just hope we don’t fall off the end of the world.