Tony Ward is chief executive of Home Funding
Is it house prices up? Or house prices down? Or house prices remain the same? Well I guess it depends on what survey you are looking at. The recent Nationwide House Price Survey supports that view that house prices have fallen again last month and are 2.6% lower than they were a year ago. However the Land Registry reports that house prices have risen slightly over the year albeit sales of £1m plus homes has dropped sharply. There certainly is a variance of views at the moment.
I think what it is fair to say is whatever analysis you are looking at is that the market is starting to stall somewhat. It is still early days with the new Funding for Lending scheme so it is unclear as to what good this will do. Early comments suggest that whilst it has been good for people with a large deposit to put down, it is less helpful to those customers on higher LTVs but maybe this will change over time.
So how important is maintaining a robust housing market for the economy? Hugely important. Not only does a healthy housing market deliver jobs in various sectors but owning your own home is still a huge aspiration for many people living in the UK. It is also a huge lever in instilling greater consumer confidence in the economy at large.
Whilst the IMF suggests there is a correction to be made and we still have a house price bubble in the UK, I tend to dispute this view. I think that demand will always outstrip supply (we can’t build enough houses to meet demand) so I don’t believe that house prices will crash anytime soon.
However I predict house prices will remain at best stagnant for the rest of this year and the market needs as much support as possible to encourage lenders to provide funding across the board supporting all LTV groups. Let’s hope the Funding for Lending scheme does the job it was set up to do.