Certainly the Royal Institution of Chartered Surveyors (RICS) would agree that Help to Buy and other initiatives have prompted the sector to come alive. Its monthly report says prices are up for a fourth consecutive month as buyers return to the market in their biggest numbers for four years.
The RICS says July saw an acceleration in the housing market recovery affecting each and every part of the UK. Alongside returning buyer confidence there was a pickup in potential sellers too, with new instructions growing for the sixth month in a row. Still, the rise in supply has not kept pace with the rise in demand, particularly in London, pointing to more price rises ahead.
RICS said estate agents had significantly upgraded their forecasts for house price growth in recent months and now expect growth of 2% over the coming year and of more than 4% in each of the next five years.
Is this all cause for alarm and should we see an early rise in interest rates to quell any brewing storm? No. From the outset of the credit crisis Mervyn King said that monetary policy was only one tool for dealing with the issues of the nation’s debts. Fiscal policy had a significant part to play too. Mark Carey reiterated this view recently when he said interest rates were not the only policy option to deal with a booming housing market.
It’s worth reminding ourselves we have an election in 2015 for which we will all need to feel considerably wealthier and optimistic and that, while austerity is the public medicine we need, G20 nations are agreed that debt and consumer spending are the only way to get growth in the short term. In the UK that means leveraging housing assets.
Against that backdrop, any debate about the validity of these current measures is rather meaningless. Notwithstanding global or European upsets, expect house prices to continue to go up.
Robin Johnson is managing director of KFH Chartered Surveyors
