The number of houses sold in the last quarter has now matched levels last seen in 2008, according to a survey conducted by the Royal Institute of Chartered Surveyors (RICS). The amount of property transactions per chartered surveyor was 21.3 in December 2013, comfortably outstripping the 9.8 figure in the depth of the recession in early 2009.
The startling figures have caused recent concerns about the sustainability of house prices to resurface. A common worry amongst Contractors looking to buy this year is the rate at which property prices continue to spiral upwards. Beyond that, there is also the logical concern that a home may be bought near the top of a price curve, followed by a crash a few years down the line, leading to the dreaded ‘negative equity’ situation faced by many Contractors in 2008, where mortgage balances exceeded property values.
These concerns have been fuelled by the deluge of statistics in the national media since the turn of the year around the housing market. For example, the Office for National Statistics (ONS) stated in November 2013 that prices had increased by over 5% year on year, a figure that has accelerated since and shows no sign of abating in 2014. Availability of mortgages with deposits as low as 5% via Help to Buy, have also added to fears that a downturn will erode what little equity is in a property when such schemes are utilised.
Recent housing market statistics have caused Bank of England Governor Mark Carney to reassure a recent Treasury Select Committee that the Bank would step in when needed to apply the brakes. One of the measures for the Bank to monitor concerns standards of mortgage assessment, to ensure they do not become overly relaxed, leading to another credit bubble. Carney pledged to ‘stop this type of behaviour in its tracks’, already demonstrating a more pro-active approach than his predecessors.
One of the more significant summaries of current market conditions came from RICS director, Peter Bolton King.
“The housing market is starting to thrive once more. Sales are at their highest level in almost six years and this is being reflected right across the UK.
“Growing availability of affordable mortgages has released some pent-up demand from a market that, in recent years, has seen many viable buyers unable to enter the market
“On the face of it, this seems like good news but unless we see a marked increase in the number of homes coming up for sale we could well be looking at a price rises becoming unsustainable in some areas.”
Article By: Taj Kang, Business Development Director at Contractor Mortgages Made Easy
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