How could anyone argue against prudent lending of any kind, but particularly with mortgage applications, to stop the problems of the past by way of massive mortgage defaults by consumers who over extended their financial capability? I suppose that there is only so much available funding and mortgagees, in the post credit crunch era, have been careful not to encourage applicants to take on more debt than is healthy but the Bank of England and the Treasury should monitor this closely to make sure that around the fringe there are no abuses of the system.
But how RICS could ever link a cap on house prices to 5% beggar’s belief. They are stating the obvious by recommending financial prudence but in any event change to mortgage lending lags behind changes to the housing market values by possibly a year or so and therefore it would make it very difficult to link these elements in a constrained fashion.
What housing bubble? Property prices across the UK have been in the doldrums for the last two –three years and now at last there seems to be some acceptable growth that usually lags behind London by 18months to two years. This growth is the very stimulant that the economy needs to get up and running to provide jobs, bring in taxes and improve standards of living.
First time buyers will always be disadvantaged by housing growth. Frankly the only way that they would get a profound benefit is during a recession when prices drop by 20-30% but that would be disastrous for the economy and the rest of the country.
I think that commentators are getting too jumpy and vexed about a housing boom. If at the moment there is 5% growth in house prices this will undoubtedly stimulate retail spending, the construction industry, sale of white and brown goods and this is no bad thing.
Cast your mind back to 2010 when some commentators complained that Osborne’s budget cut-backs would hit the outer regions hardest and exacerbate the collapse of house prices across the UK particularly where it is connected to the public sector. Now, at last, we have some visible growth (long over due) and everyone is worried about a boom!
Lest we forget, sustainable growth in the housing economy shrinks debt in relation to equity and that’s a good thing for anyone who has a home, has a buy-to-let investment or is perhaps using their home as a pension.
We have to thank the gloriously incapable Chancellor Brown for the destruction in the pension markets for the first five years of his term by snatching the tax credits from pensions and if house owners want to use their homes as a quasi pension as a result of the lack lustre performance of pensions generally – good for them.
“Don’t panic Mr Mannering, they don’t like it up’um” Stay cool, there is no problem of housing boom it is, after all, a press induced phenomenon that gets people talking about the housing market and, lets face, it is a subject close to many peoples hearts.