It’s gone from a trickle to a flood. First there was RICS with its closely watched surveys of estate agents; then there was Rightmove; and then earlier this week the British Bankers Association joined the party; now both the Nationwide and the Bank of England have hailed the comeback of house prices.
Actually, at first glance, the Nationwide report seems to indicate the opposite; house prices were down 0.2%, in September, the same as August, but this time the leading mortgage lender was bullish about the future. Fionnuala Earley, group economist at Nationwide said: “Estate agents have consistently reported increased buyer interest over the last few months, which should help to support the market going forward. Rather than seeing a rapid and significant correction in house prices as predicted by some, we are more likely to see a continuing smooth slowdown as lower price inflation attracts more demand, and thus liquidity, into the market.”
The Bank of England report seemed to shed even more optimistic light on the matter. Mortgage lending, says the Bank, was up £7.6bn in August, compared with £6.5bn in July, tha’s the biggest monthly increase in over a year. As for the number of loans for house purchases- they rose to 107,000 from 99,000 in July. It’s still well below the peak of 130,000 in late 2003 – but then that was the silly season.
The Bank of England figures are significant because they seem to give a good indication of underlying changes: and often pre date changes in price.
It seems clear, this Autumn the market seems to be lifting and as a result the members of the “soft landing club” are saying “told you so”.
We don’t want to sound like a record that has got stuck but we will repeat our waning from earlier this week at this point. “There are long-term forces at work here. And as we have warned repeatedly, low inflation means it will be years before the ratio of average house prices to income returns to historical average, and that these days, inflation is no longer there in the backgroud, quietly eroding the true value of debt, meaning mortgages no longer get cheaper in real terms over time” In other words, a few good months does not spell an end to shaky foundations for the property market.
© Investment & Business News 2013