House price inflation appears to be slowing, with forecasts for 2002 around the 5% mark. However, prices are still rising, albeit more slowly than over the past three to four years. It is easy to forget that even relatively small rises of 5% have a significant impact on the affordability for purchasers, especially the first-time buyer.
The property market relies on first-time buyers to remain healthy. It is often difficult for people to make that first foray into the market. Salary just does not seem to rise enough to afford the property we desire, but with some hard-earned savings we can make that first leap onto the property ladder.
The economic news is not as gloomy as was mooted several months ago. Expectations for the coming year are cautiously optimistic, and hopes for potential homeowners are higher than they were pre-Christmas. The cost of mortgages is still at its most affordable level for decades.
It is slightly against the trend for some lenders to limit the borrowing level of home purchasers as crudely as they propose. By using post codes to define the maximum percentage of the property that they will lend, creates ‘blackspots’, at a time when the economy needs all the help it can get.
It seems an extreme measure to tar a whole area with such a broad brush, and appears to border on panic, or an ‘ivory tower’ mentality. If there are genuine concerns about property prices, then it makes sense to instruct a qualified valuer correctly. They are the professionals working in these areas on a daily basis. Different streets within a locality can have quite different pricing environments.
If anyone should advise on local pricing, it should be a professional paid to comment on current value as well as the potential market for a sale. The valuer’s job, their firm’s reputation and the indemnity insurance depend on them getting the value as accurate as possible.
The attitude displayed by several lenders in defining some areas as unsuitable for lending at 95% is most unhelpful. New purchasers who have scraped together the 5% deposit needed, will have to either put their dreams on hold, or boycott the lenders adopting this stance.
The housing market and the economy do not need any help from people with limited knowledge trying to talk prices down across huge and diverse areas.
Simon Jones is associate director of Savills Private Finance