Liquid error: wrong number of arguments (2 for 1) Housing market "rocketing to recovery" but no bubble yet | Marsh & Parsons Sales and Lettings Estate Agents London

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Housing market "rocketing to recovery" but no bubble yet

Tue 17 Sep 2013

Parts of the housing market may be "rocketing to recovery" but a bubble is still a long way off, mortgage industry experts say.

Much of the activity has been driven by a scramble to get cheap mortgages before rates finally start rising.

They were responding to new government data showing house prices in England hitting a record high after rising 3.7% and nearly 10% in a year in London

Yet price price growth outside London and the South East was modest, with a 2% fall in Scotland than 0.7% fall in Wales. Prices also fell slightly in the North West and North East.

English house prices may have beaten their January 2008 high, but the UK as a whole is still below the peak.

Richard Sexton, director of e.surv chartered surveyors, said: Parts of the housing market are rocketing to recovery. The catalyst for the turnaround has been a drastic improvement in mortgage lending to first-time buyers, which has helped thousands more people realise their dreams of homeownership. Lending to high loan-to-value borrowers in August was 47% higher than last year and first-time buyer numbers are at their highest since the 2008 financial crisis, which is increasing demand for a limited supply of property."

Oliver Atkinson, director of the online estate agents Urban Sales and Lettings, said: "The housing market is being driven by a heady cocktail of confidence and fear. Confidence that the dark days are over, and buyers' fear of being left behind as another boom takes hold.

"Buyer sentiment is improving steadily, and there is a growing sense that - despite the Bank of England's forward guidance - the current cheap mortgages won't be around forever.

"The result is the release of a lot of pent-up demand from first-time buyers, as those who have saved hard for a deposit decide that now is the time to take the plunge."

Brian Murphy, head of lending at Mortgage Advice Bureau, said: "The figures should go some way to ease concerns that Help to Buy is already driving property inflation at a dangerous rate. Although house prices in London are increasing significantly faster than the UK average, overall house prices have risen at a stable rate, suggesting a recovery that is sustainable rather than combustible."

Peter Rollings, chief executive at Marsh & Parsons, said talk of a housing bubble is wide of the mark. "Prices in most parts of the country are still well below the market highs of 2007, and the recovery in many parts of the UK is relatively muted. Ultimately, house prices can only increase at a rate that people can afford so while wages remain low, and lending continues to be checked, there is a limit to how high house prices can rise.

However the London property market tells a different story. In the three months to June, we recorded 11% more buyers entering the market in competition for 14% fewer properties. Property is changing hands in record time and for close to the asking price, with 98% of the asking price for prime London property regularly being achieved.

David Brown, commercial director of LSL Property Services, added: Strong house price growth is a beacon of optimism, and should act as yet another draw for investment in the property market. But to keep price growth at sensible levels, more houses need to be built. Having enough houses to go round is the only real way to keep prices from spiralling too far."

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