Increasing house prices seem to have done little to dampen property demand as approvals for mortgage applications hit a total of 4,874m this September – an increase on last September’s total of 4,071, according to the Building Societies Association. Once again, records were broken with these approvals confirmed as the highest September figures ever.Even taking into account the fact that the seasonally adjusted approvals figure was down by 6.2% on August’s total, there is no disguising the fact that mortgage demand will remain high – at least in the short term. The prospect of a further interest rate rise before the end of the year curtailing demand is likely to founder because of one overriding factor – the housing shortage. The government has long recognised that the shortage in housing stock – especially in the South-East – is a key driver in house price inflation. It has developed several plans to deal with the problem. John Prescott’s idea to concrete over most of the Thames Gateway was one drastic response. The latest government wheeze is New Growth Points. Twenty-nine areas in Britain have been identified as needing help to regenerate. These areas will share in 40m start-up funding to support infrastructure, unlock sites for new housing and to assess environmental impacts. The government estimates there is the potential to deliver up to 100,000 new homes. The initiative is in response to a government review of housing supply which found that during the past 30 years house building rates have halved whereas over the same period demand for new homes has increased by a third. There is an urgent need for new-build property. If we don’t build more homes, less than a third of today’s 10 year olds will be able to afford a place of their own in 20 years’ time. The mortgage sector also requires new homes to come on-stream if it is to remain vibrant. The average asking price for a property in England and Wales is at a record 218,954 – 11.5% higher than a year ago, according to Rightmove. This is having a detrimental effect on the sector because as prices increase, the supply of houses coming onto the market falls because fewer home owners can afford to trade up. This adds to the shortage of suitable property for sale, resulting in further upward price pressure where demand outstrips supply. While there may be no respite on the horizon for potential first-time buyers, the present situation will shore up the buy-to-let sector. Renting for longer and buying your first home later, possibly via shared equity or an interest-only mortgage, is the new reality for many. The danger is that with so many buyers unable to afford a mortgage in this housing climate, those who wish or need to move quickly may find themselves watching their homes sit on the shelf for months on end as mortgage brokers rely ever more on remortgages. Perhaps this is a good time to be buying shares in house builders and firms in associated sectors.
- Top trends
The FSA wants firms to become familiar with its rules before changes come into force next year and its specialist handbooks are a good starting point, says Bill Warren
titlesolv.com has announced a 20% discount on its search indemnities and defect cover policies when solicitors buy more than one policy. The website, which has also raised its indemnity limit to £2m is releasing the discount offers after the launch of further lender and owner residential covers to the site.The 20% discount applies to all […]
Research by Halifax shows that the traditional image of British life is changing, with home owners preferring to live in flats rather than terraced or semi-detached housing.
The Liberal Democrat Party has revealed the City of London emits 55 times more carbon dioxide per head than Hackney. Research shows that the UK is emitting almost four times the current global average emissions, with an average of around 9.2 million tonnes of carbon dioxide per person. The top five areas producing the most […]
Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.
News and expert analysis straight to your inboxSign up