After years of stagnation the housing market’s finally showing new signs of life, but some experts are warning we could be heading for a new “bubble”.
Strong growth in demand from would-be buyers has prompted a sharp upturn in house prices in some regions, leading some experts to fear that the market is in danger of overheating, and that the country is heading for another bout of boom and bust.
The Royal Institution of Chartered Surveyors recently took the step of calling for a cap on annual house price growth, suggesting the Bank of England should intervene if they rose by more than 5 per cent.
So why are these concerns being raised now? Much of the recent uplift in demand has been put down to a significant increase in mortgage availability over the last year, thanks in large to a string of Government schemes to kick-start the market, such as Help to Buy and Funding for Lending.
Some people who may have struggled to get a mortgage previously have suddenly found that lenders have turned the taps back on again.
The typical interest rate on new mortgages has fallen to a record low of 3.47 per cent, according to recent figures from financial regulators, while lenders have reported seeing first-time buyer numbers reach their highest levels in more than five years.
The greater demand has combined with a shortage of properties for sale to push up prices, pundits note.
Meanwhile, the Government’s preparing to inject a further burst of activity into the market with the launch of a second, more controversial, phase of Help to Buy at the start of next year.
The first stage, which began in April, offers loans so people can buy new-build homes with a deposit of just 5 per cent.
The second stage, due to come into force in January, extends this support to buyers with small deposits to any property costing up to £600,000, with the state effectively taking on the risk of a borrower defaulting. Several commentators have urged the Government to consider ditching this phase, including financial expert Ros Altmann, who says the scheme should be focused on building new homes, not “increasing demand for existing properties”.
As for people who rent properties, there is that all important question about how to avoid unnecessary costs when moving out of a rental home.
• Planning final bills ahead of moving day will help to tie up any loose ends between tenants and landlords, and cut the chances of a dispute further down the line.
• Giving utility providers at least 48hrs notice before leaving will also allow them to send out a final bill, which a landlord may also want to see.
• If no formal inventory was compiled when you moved in, it’s a good idea to take photos to show how you left the property.
• Unless the landlord’s agreed to hang onto it, you should also remove any additional furniture you have brought with you.
• And finally, come clean about breakages. If a landlord has to pay more to replace a damaged item, they may pass these extra costs onto you and deduct the money from your deposit.