Housing market booms as agents say no to crash
House prices are up 2.7 per cent from last month and over 12.35 per cent from twelve months ago – the highest rate of annual inflation for over a year, according to the latest survey from the National Association of Estate Agents (NAEA). In the sellers’ market sale prices achieved are, on average, 97.1 per cent of the asking price, indicating that buyers are prepared to pay more to secure the home they want. Additionally, the ratio of buyers to the number of homes for sale has increased to 12:1.
Estate agents are confident of a healthy market. Two-thirds do not expect there will be a housing market crash in the foreseeable future, although one-third is expecting a slowdown by the end of 2005. Potential causes of a slowdown include further interest rate increases, the slowing down of the buy-to-let market, and the effect of the war in Iraq.
Estate agents across the country are reporting increased prices and more buyers on the market, according to the latest NAEA figures.
Melfyn Williams, president of the NAEA, comments, ‘As the weather is heating up so is the housing market, with strong annual and monthly price increases recorded across the country yet again this month.
‘With prices continuing to rise there is inevitably talk of a crash. However, it is looking unlikely that we will see dramatic falls this year, and when the market eventually slows down it will be a softer landing than the spectacular crash predicted by some doom mongers.’
FSA to regulate home reversion plans
The government has announced that home reversion plans, designed to allow home owners (and specifically older people) access to the equity in their homes, are to come under the regulation of the Financial Services Authority (FSA).
Under a mortgage-backed plan, or life-time mortgage, the home owner takes out a loan secured against their home, similar to a standard mortgage. They then receive the proceeds either as an income or as a lump sum. The individual remains the owner and when he or she dies or moves home, the loan is repaid from the sale of the property. These forms of loan will automatically come under the FSA's remit in October this year, when the watchdog takes over the regulation of the mortgage industry.
The Council of Mortgage Lenders (CML) said it welcomed the government's intention to regulate home reversion plans. ‘The Treasury has made the right decision’, said director general Michael Coogan. ‘Home reversion schemes and life-time mortgages need to operate under a comparable system of regulation as soon as possible, to safeguard consumer protection.’