It didn’t take long to wait, and with one fell swoop the MPC delivered its first bank base rate cut in seven and a half years plus a package of measures which have been designed to keep the banks’ lending. No-one can deny that market conditions currently favour mortgaged homeowners, or those wishing to join them – the less said about savings’ rates the better.
However, as stated, from a housing perspective the Central Bank is trying to align the stars in order to keep the market functioning. My conversations with agents appear to suggest that those first few weeks of post-referendum worry and uncertainty have given way to a more sanguine view – not just of the vote itself but also the overall impact on housing supply/demand, coupled with individuals wants and needs, not least how they may purchase a first home or move up the ladder.
For existing homeowners worried about catastrophic drops in prices, and our ability to create both a crash and recession of our own making, this fear appears to have subsided somewhat. We all know there is a long road to be travelled but there remain a number of truisms about the UK housing market which will not change – notably that no-one’s making any more land, we’re not building enough homes despite recent attempts to do so, demand to buy remains strong, lenders (at present) have the appetite and capacity to lend, and the Government is still fundamentally focused on boosting home-ownership, albeit at the expense of buy-to-let landlords and the private rental sector in general.
With regard to house prices, I viewed the recent prediction from Countrywide that prices would fall by 1% next year with something akin to bemusement, not least because given the increases over the past few years, a 1% fall feels like (for want of a better phrase) a fart in a wind tunnel. Not that the Government would want such a thing but it seems that a 1% fall would certainly suit existing homeowners, and perhaps give a small amount of hope to those trying to get on the ladder. A very small amount of hope. My own view however is that prices, long-term at least, are only going in one direction and it’s not down.
In terms of supply, it’s likely to be that house builders are not able to meet the Government’s target of 1 million new homes by the end of this Parliament, and one might think that their appetite to do so isn’t there anyway. The recent revelation that the building industry is short of the 1.8 billion bricks required to fill the housing shortage – according to the NAEA and CEBR – also means that house building targets will remain just that, rather than fulfilled. This will keep house prices high and mean home-ownership will remain out of reach for a considerable number.
That said, again judging by recent figures from the CML, the number of first-time buyers has been on an upward trajectory. Lending to first-time buyers was up 25% to £5.5 billion in June – albeit before the EU vote – and one might anticipate that this will continue to rise, particularly as more buy-to-let landlords decide not to add to portfolios. Agents, I suspect, will not be seeing a like-for-like first-time buyer/landlord purchaser replacement policy taking place but undoubtedly the market, and conditions, are being ever more skewed in the first-timers’ favour. It’s perhaps why we have started to see lenders moving away from buy-to-let to the more underserved borrower groups – and I count first-timers amongst those, particularly when it comes to high LTV mortgage products.
All in all, this market is definitely one in flux, and agents are having to roll with the punches and be as flexible as they possibly can, especially in terms of securing listings and getting through to completion. Transaction levels appear to be holding up – just – but there is a sense of fragility about the market still, even if we appear some way down the road from the immediate period post-referendum.
In a sense, these past couple of summer months are not likely to give a true picture of the state of the UK housing/mortgage market. That will come as we motor into September and drive on into the autumn period; it’s traditionally a stronger period for all of us stakeholders and I sincerely hope this remains the case in the months ahead.
