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BLOG: The housing market’s green shoots need protecting

Robin Johnson
Written By:
Robin Johnson
Posted:
Updated:
16/01/2013

The Office for National Statistics illustrated the imbalance in our property market with the news that house price rises continue to be fuelled by London and the South East.

The strength of London in the face of everything the world economy throws at it is staggering.

Land Registry transaction figures for 2012 showed a slowing market overall but with lending volumes remaining fairly stable overall, it suggests more property is bought and sold in London and the South East than anywhere else by some considerable distance.

Our own experience tells us the impact of foreign cash (or extra-national borrowing) buyers – who affect prices in very real terms – continue to play an important role but do not obviously figure in any UK mortgage data.

Nationally, it is a much more subdued picture. More people are actively on the hunt for houses, with increased buyer inquiries in November suggesting improved confidence.

It seems people who are in a position to buy a house are gradually coming forward to test the market according to the Royal Institution of Chartered Surveyors.

Low interest rates for the foreseeable future (2015 at least) means the extra lending from the FLS will go to house movers rather than remortgage business. Surveyors expect to see house transactions climbing in 2013 to their highest level since 2007 while house prices were forecast to rise by 2%, a view echoed largely by Halifax.

There is no strong impetus or direction to push general house prices north at the moment though London in particular will continue to benefit from the import of foreign money seeking refuge from other more volatile jurisdictions.

There are threats of course. The removal of several million mortgage prisoners (trapped in interest-only products) from the market will exert downward pressure on prices and LIBOR litigation and the euro-zone debt crisis loom over bank balance sheets.

More imminently, however, is the impact of public sector job losses, higher taxes and any subsequent dip in confidence.

The challenges for 2013 are clear. What little green shoots we may have need protecting.

Robin Johnson is managing director of KFH Chartered Surveyors


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