UK property market not overheating

Nia Williams

September 16, 2013

When asked what one word they would use to describe the housing market now, one in five people said ‘recovering’.

A further fifth said that the market is ‘stable’ and just 1% describe the current market as ‘crashing’ – all strong indications that market sentiment has improved.

Adrian Coles, director-general of the Building Societies’ Association, said: “Signs of recovery in the market have been much discussed over the summer and these Property Tracker results confirm an improved outlook.

“We are however, still clearly in recovery mode; and the cautious words of those who have been sounding warnings about a market already at risk of overheating need to be listened to but it would be wrong to take any steps at this point that might damage the recovery in its early stages.”

The BSA Property tracker reveals the majority of consumers (just over 60%) now believe that house prices will rise in the coming year, the highest proportion since the Property Tracker survey began in 2008.

The major perceived barriers to property purchase have declined, the most notable being access to mortgage finance, now seen as a barrier by 39% of people, down from 46% three months ago, and 60% in 2011.

This wider availability of mortgages for buyers with smaller deposits is starting to make a difference and in the first seven months of the year a quarter of all mutual lending was to those with a deposit of 10% or less.

Government schemes such as Funding for Lending, Help to Buy: equity loan and the resultant positive media coverage about the housing market may have also filtered through, helping to reduce the perception of these factors as barriers to home ownership.

Coles added: “In our last report in June 2013 we warned against the risk of a housing bubble if a clearly defined exit strategy to the Help to Buy scheme is not implemented by Government.

“Work continues to progress on the details of Help to Buy: mortgage guarantee for launch in January 2014 and whilst the original imperative for it may now have been reduced, it will clearly still aid some aspiring homeowners when it is introduced next January.

“At the moment, sentiment across the UK, particularly in markets outside London, is increasingly positive, but still cautious.

“I have no doubt that the high profile of Help to Buy: equity loan and the wider availability of 90% and 95% mortgages have helped to improve consumer confidence.

“July figures from the Bank of England showed that mortgage lending from the mutual sector was at its highest level since January 2010 with a third of this lending to first time buyers.

“The hope is that the mix of consumer sentiment, additional house-building, mortgage availability and Government intervention will lead to an improved but stable market.”

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