It would seem that as soon as the housing and mortgage markets show any sign of life, there are a raft of organisations, individuals and commentators quick to suggest numerous measures in order to keep it, at the very least, on its knees. This time it is RICS who have shot out of the blocks and suggested the Bank of England should cap house price inflation at 5% per annum through a series of measures to be undertaken by the FPC including the enforcement of lower LTVs or LTIs, restricting lending and shortening mortgage terms.
On reading this I almost said out loud, ‘And what about the notion of a free market?’ although post-credit crunch this appears not to be an option and now it is that policy makers and industry thinkers are falling over themselves to insist the market be kept as damp as possible. I’m not sure if I’ve lost the plot here but at a time when surveyors’ services have never been so much in demand – certainly over the last four or five years – their mouthpiece is suggesting the market be held back?
Would this be something to do with the fact that the lack of surveyors has recently been blamed for the slow progress of property purchasing/remortgaging in recent months? Perhaps RICS would like transactions to be reined in so that its membership can catch up with all the work it apparently hasn’t got round to yet?
On this very topic, a shortage of surveyors is proving to be a very real problem and is perhaps in itself a measure holding back the market at present. I have no problem with the surveying profession however, after the last housing market crash, it is perhaps not surprising that individuals are not rushing to join its ranks. The money they earn from an individual survey is pitiful and that’s without the lender taking its cut. Six to eight weeks to have a survey completed in some areas is not surprising and the problem is only likely to get worse.
The problem will probably come to a head sometime soon and, once it does, I think we will have to see lenders relying on historical valuation data in order to get the job done. Either that or we will see more drive-bys or the use of Google Maps/Street View. After all the surveying profession is not going to see an influx in resources anytime soon. One solution may be to have a historical record of the last time the property was valued which could be held by the Land Registry. For example, if the owner remortgaged a year or two ago, then the lender can use this valuation and add in potential uplift or fall to come up with an up-to-date figure. It would certainly beat having to wait two months-plus to get a valuation completed.
In regards to the wider UK housing market the fear from RICS and many others appears to be that we are somehow already in an ‘overheating’ situation. I would suggest they try telling this to agents/brokers/housing market professions in Wales, Scotland or the North East. The market is certainly not overheating in these areas and, given the low transaction levels we have seen across the country over the past few years, I would suggest we are still a considerable time from boiling over. In fact I believe we are simmering nicely at the moment and instead of there being a concerted effort to pull back from any recovery before it really gets going, we should be doing all we can to make sure the gas stays on and the water remains at a clement temperature.
Richard Adams is managing director of Stonebridge Group