Steady as she goes is the right approach
Bob Hunt is chief executive of Paradigm Mortgage Services
In my last blog I spoke about the feel-good factor that was enveloping the nation as sporting success and a recovering economy had combined to help put the smile back on peoples’ faces and the good news keeps on coming on both fronts.
The Ashes have been retained with the minimum of fuss, Mo Farah continues to see off all pretenders to his long-distance throne on the track and the mortgage and property markets have received a number of boosts.
Bank of England Governor Mark Carney’s interest rate pledge has returned some confidence and stability to proceedings and further encouragement came in the shape of house building starts increasing by 6% in the second quarter of the year.
The naysayers will complain that this isn’t enough of an increase – and are probably accurate in their observations – but I prefer to view it as a welcome step in the right direction.
After all, for all the difference that initiatives such as the Funding for Lending have made, the elephant in the room has long been the lack of a discernible long-term housing strategy and it looks like this problem is now finally being addressed.
The latest figures show that starts are now 73% higher than the nadir reached in 2009 and while we remain some 40% shy of the levels reached in early 2007, continual growth will hopefully see us return to something like that level of consistency.
For all the critics say there is still much to be done, the current Government seems aware that the battle is not yet won.
Communities Minister Brandon Lewis has acknowledged as much while also making the point that 330,000 houses have been delivered in the past three years.
One area where there is further potential for improvement is if the Government relaxes restrictions on council investment in new housing, a measure which could swell stock by as much as 60,000 over the next five years.
The Local Government Association, which represents more than 370 councils in England and Wales, says many local authorities have excellent credit ratings and want to use their assets to help kick start the housing recovery and claims removing the block wouldn’t cost the Government a penny.
The Help to Buy scheme – at least the equity loan part – has also had a noticeable impact on housing starts with many building firms reporting the number of reservations has allowed them to escalate their future plans.
With the initiative set to run for three years, it may prove difficult for constructors – and the Government – to maintain the initial flurry of interest that Help to Buy has generated, but every little helps.
Personally, I think we’re slowly but surely heading in the right direction.
While the rate of new starts may be historically modest, it’s important we don’t try and solve the problem overnight.
We witnessed building firms mothballing developments in the UK at the start of the global financial crisis – and have seen it happen to a much worse extent on the continent – so the last thing we want to happen is a reoccurrence of that.
Steady as she goes may not be the mantra that appeals to the critics, but it may just be the right approach to get the job done.