It’s steaming up with the hot air from talk about fears of the dreaded housing bubble, and various media commentators and politicians are widely discussing the bubble bursting. It’s moving to a feverish pitch and even the Bank of England Governor, Mr Carney, has said “Britain’s housing inflation is threatening the entire economy”, and with arms above their heads, people are shouting “What can they do to stop it?”
House prices are of course rising, especially in the “La la land of London” where price inflation has been boosted by the Russian oligarchs and billionaires purchasing blocks of apartments for untold millions. It’s taken a while for the ripple to drift away from the capital and even as recently as last July house prices in Hinckley were still falling. They’ve caught up now, and last month’s house price index from Land Registry showed a 3.9% increase across Leicestershire. However, we’re still a mile away from the heady heights of 2007 and the national average price is still £12,494 behind. Ah, a reality check!
What is happening locally, and fuelled by first time buyers is that the market is moving. Houses are entering the resale market, new developments are being built, landlords are investing again, and developers are buying and selling on. Confidence is back!
However, the brakes are being applied by the banks, and this is where their prudence will stall any overheating of the housing market. From the beginning of this month a new criteria based on affordability for mortgage lending has decreased the chances of moving. There have been many instances where first time buyers, armed with a mortgage in principle certificate, have offered on houses, only to be refused the lending when they represent themselves again for reassessment. The self employed, especially those who pay themselves via a dividend are also struggling to borrow money. Valuation surveyors, who after the boom were sued by the banks for over pricing houses, are cautiously down valuing homes.
All will be well, but is there a Hinckley housing bubble? No, not yet anyway.