The buzzword at a debate on housing last week was – depressingly for the mortgage market – renting. The Land Data Great Housing Market Debate in Westminster had the bosses of Paragon Mortgages, Your Move and Galliford Try Homes, as well as the chief economist at Nationwide Building Society and BBC chief economics correspondent Hugh Pym on the panel.
With little in the run-up to the election on housing, apart from the Liberal Democrats’ plans for VAT on new-build, it was left to the industry to debate where the market was headed.
With housing production down, finance constrained and increasing legislation making life difficult for everyone, the panel had no illusions about the state of the market.
While David Newnes, managing director of Your Move, pointed out that house prices have increased 54% every five years since World War II, every panel member predicted that steady, not dramatic, rises in property values would be the order of the day.
When the same question about the future of house prices was put to the audience, only one person raised their hand for further falls. But as Pym quipped, “Do turkeys vote for Christmas?” In other words, everyone predicting the same thing is no barometer of anything. After all, widespread belief in an unstoppable boom period got us into this mess.
As we all know the key constraining factor is finance. Gross lending figures for March from the Council of Mortgage Lenders were positive in that they rose to £11.5bn from £9.3bn in February, but the overall figure for Q1 2010 was terrible at just £29.5bn – the lowest quarterly total since 2000.
So unsurprisingly, the liveliest part of the debate was on the future of the private rental sector. Could we see Britain adopt the model of Germany, France and Austria where the majority of consumers rent? Not without major incentives to widen the sector. If it is the next big thing, we first need to ensure landlords have ready access to buy-to-let finance.
With access to housing finance stagnant and demand for property to rent hitting new highs, it’s clear that whoever takes over on May 6 needs to get a proper handle on the housing market. And improving, rather than impeding with additional legislation, access to affordable finance for would-be property buyers is a good place to start.