There is more data produced about the state of the housing market than there are property transactions.
Take the following for example:
The Rightmove house price index says seller asking prices in January were up 0.3% compared to December. (It’s always good to start the New Year on an optimistic note. However, I suspect a large number of house sellers are going to be disappointed as we approach Easter.)
At the same time, Halifax reported that house prices rose by 0.8% in January. Clearly, they must be different houses to those being sold by Rightmove.
On the other hand, RICS surveyors said they experienced a decline in new instructions in January, with the number of sales per surveyor slipping to 14.6.
Hometrack also reports a 5.4% slowdown in supply and 9.5% drop in demand, which it says will have an adverse impact on prices.
The British Bankers Association tells us that mortgage approvals fell by 29% over the past year and the National Association of Estate Agents says that the number of property transactions has slumped to an eight year low.
So, we have a slowdown in supply and demand, a slump in the number of property transactions and a collapse in mortgage approvals. And yet, house prices have increased by 0.8% and asking prices are up 0.3%.
Hmm, interesting.
I’ve worked in the housing market long enough to know that all this data doesn’t quite stack-up. Someone, somewhere, needs to go to Specsavers.
Part of the problem, I’m sure, is that the housing market is not homogenous and what’s happening in one geographic region is not necessarily true for the rest of the country.
However, I suspect that what we’re also seeing here is ‘ivory tower syndrome’; boffins in big offices making market predictions based on Excel spreadsheets, rather than experience gained at the coalface.
Well, no one is closer to the coal face than mortgage brokers. What do you believe is happening out there in the market?
Do you think the worst is nearly over and that house prices and mortgage transactions are now on the road to recovery? Or do you think we’re teetering on the edge of a precipice, with an imminent increase in interest rates being enough to topple the market over the edge?
If anyone’s got 20/20 vision and a clear understanding of what’s really happening, it’s you.
So, how do you see it?
Charles Haresnape is managing director, residential mortgages, at Aldermore
