The impact of both, coupled with relentless noise about fiscal cuts, austerity measures and employment fears, will undermine an already fragile mortgage market.
In 2010, it was mortgage supply that was tight, with lenders repairing their balance sheets and getting their capital requirements in order.
In 2011, we have seen a significant increase in product availability, uplifts in LTV ratios and even a few 100% mortgages. And I’m sure we’ve all been delighted to see the return of some competition, with seven-day sales and amazing rates.
However, even with these lender initiatives, volumes haven’t lifted significantly and it seems it is now a lack of demand that is hampering growth in the market.
Concerns over job security and low or negative equity seem to be the driving factors here, with many homeowners unable to move as a result and many first-time buyers still unable to find the necessary deposits.
It’s great to see lenders responding with innovative products, particularly regional mutuals targeting local families.
The flexibility of some lenders that allow homeowners to effectively port their negative equity to enable them to move is also welcomed.
But isn’t this just tinkering at the edges?
London and the South East remain vibrant, largely supported by the buy-to-let and luxury property markets.
Both of these property types can present greater challenges to lenders’ credit policies and, in isolation, AVMs don’t work well in these categories.
Yet, with an ever-increasing valuer average age and some 50% having already left the industry, surveying capacity is coming under increasing pressure in the South, even with depressed transaction levels.
This, coupled with a downward pressure on the fee paid to the valuer against a backdrop of rising costs, means there comes a point at which the price for the job versus the higher risk incurred becomes unsustainable.
That’s when either quality is compromised or the valuer exits the market, voluntarily or otherwise, putting further pressure on capacity.
So, both first-time buyers and valuers are rapidly becoming endangered species.
Real and profound issues are facing our industry and it is evident that we are seeing a fundamental structural change to the housing market.
This demands a radical rethink on a number of levels and across a number of stakeholders. It requires collaboration from all of those stakeholders to conceive a longer-term, sustainable plan that works for everyone.
My eldest daughter is 19 and just about to start her second year at university. At her age I was most certainly thinking about buying my first home.
After securing my first real job I started looking for a house and at 22 I was able to run a mortgage, a car and a home, even on a fairly modest income as an insurance clerk.
I contrast that with my daughter’s friends who don’t even dream of their own home for now. They see themselves renting and sharing. Their primary focus seems to be on getting their qualifications and a job and then paying off their student debt.
Beyond that, they dare not look.
If that’s the outlook for this generation, then what does the future look like for our industry?
Alison Beech is business relationship director at Spicerhaart
