The early signs are that, despite the usual end of year warnings a few months ago, 2007 will be just as voluminous in lending terms as was 2006.
Enjoying the morning drive to work with sunny skies and fresh crisp spring air in our lungs could lead us to think that everything in the garden is rosy. Even the base rate has been stable for the past two months.
While the spring sales boom presents a wonderful opportunity, there are many threats lurking, hints of which can be seen in recent news stories.
One of the cornerstones of the government’s financial policy is the control of inflation. In the past, politicians might have sacrificed worthy long-term objectives to save short-term interest rate pain.
But the Bank of England, with a single inflation objective and robust failure reporting, will not shy away from prescribing medicine, however nasty the taste.
Although stable interest rates over the past two months might lull buyers into thinking we are through the worst, maybe we’re not.
A recent report suggests that there are now eight house buyers for each house seller. You don’t need a degree in economics to realise that such a mismatch will lead to a rise in house prices.
Ultimately this will lead to a rise in inflation, which in turn will result in further doses of BoE medicine.
Maybe media speculation of an 8% base rate is not far off the mark.
March is a busy period for potential sellers putting their houses on the market so supply should remain buoyant, for a while at least. The issue that should be exercising our minds is the effect of Home Information Packs on supply.
I guess there will be a burst of activity before June as some sellers see an advantage in putting their home on the market without HIPs.
But this effect will be short-lived as those sellers realise that potential purchasers expect to see HIPs. At that point HIPs will have to be arranged retrospectively and some sellers may even take their houses off the market.
Although I can see the benefits of moving the information collection aspect of housing transactions from the back end of the process to the front, nobody knows what effect HIPs will have on supply.
Any cut in the number of properties available for purchase will lead to a worse demand and supply mismatch, more house price inflation and more BoE medicine.
So enjoy the spring – things might get tougher later this year.