Simultaneously, it was declared that we were about to experience all the horror and negativity associated with a blood curdling housing bubble – boo.
Except, like the plot of a scary thriller, the only certainty is that neither of these statements are true. The reality is that large parts of the market continue to resemble the living dead, slowing shuffling from side to side, sometimes staggering backwards, with the occasional stumble forwards in terms of price and activity.
For context, annual national house price growth was most recently reported at 3% in August, hardly a re-animation of the market, particularly when offset against a similar figure for RPI movement over the same period. The exception, for anyone who has been hiding in a coffin and doesn’t know, has been London and the South East, where money continues to pour in from offshore locations including Eastern Europe.
Some commentators have suggested that the last housing bubble was in 2007. I disagree. What occurred in 2007 was an unsustainable lending bubble, when applicants who should never had been allowed near mortgage finance had magic spells cast over their applications which rendered them temporarily beautiful customers, as opposed to the unfortunates doomed to visit finance hell, that they actually were.
It was no real surprise when just months later, the spells wore off and arrears started to grow like a wart on a witch’s nose. Like the recent fad for Halloween, I think we imported this approach from America.
As the blood does start to pump a little faster in the market, helped both by consumer confidence and effective government schemes, we do need to make sure we are putting together the script that we all want to see. We certainly must avoid the horror movie cliché of a gory sequel that replays the poor practices of last time.
From a valuation perspective, that means a number of things – ensuring independence of the valuer from the instructing source ensuring no unhealthy local relationships, fro example.
There’s a clear temptation to revert to increased AVM usage – managed in the right fashion there is merit in the idea, but let’s ensure they are deployed when both applicant and property risk are clearly identified as low. Last time we let the lunatics take over the asylum in this area.
Finally, we need a reliable source of ‘fresh bodies’ in the valuation industry – else we’ll be looking at a (capacity) nightmare before Christmas.
Richard Sexton is director at chartered surveyors at e.surv