Housing bubble, what housing bubble?.. Oh.

I’ll be honest, I’m a bit perplexed.
I’ve been on the telly and the radio a few times over the past few weeks. Firstly, about three weeks ago, it was to talk about the Bank of England’s governor Mark Carney. Carney had said that the BoE had tools in their armoury to ward off an over-heated property market should it arise. These tools were primarily based on reducing the Loan to value percentages that Lenders could offer. This caused the press to question if there was a housing bubble.
His solutions to a problem we didn’t yet have, I pointed out, were interesting as they were in direct conflict with the governments Help2Buy scheme, which was addressing people’s lack of deposits by ostensibly encouraging and facilitating 95% mortgages. Strange as the BoE was surely hand in hand with the Government on Help2Buy.
However, I said that it was far too early to talk of a ‘housing bubble’ and it was clear he was merely being cautious. I also said, with conviction that I didn’t feel Help2Buy was fuelling a feeding frenzy. That it merely aided those in need and gently added to general confidence that had arisen with a little more economic confidence.

Then RICS came out with their suggestion that property price rises should be capped at 5%, with the inference that a housing bubble had started. I hit quite a few screens and airwaves that day. By the end of the day the sweeping 5% cap had morphed into ‘well maybe not 5%’ then ‘maybe geographically targeted’ and ended with a general sense of ‘this hasn’t really been thought through’.
Again, I pointed out, the market simply has a bit more confidence and is a bit better than the past few horrendous years. A little more traction allowing more people to get on with their lives and buy, sell, move. Yes, there may be a little blip before supply starts to meet demand but this should level as builders build and more sellers sell.
It was far too early to talk of a housing bubble, I said with conviction.

I was confident that Help2Buy would not create a frenzy. That it was being introduced gently and that it would slowly but surely help the right people access home buying. I was confident that the lenders criteria on who they lent to would be strict and that we wouldn’t be making the same mistakes of pre-2007. In fact only last week the Chancellor had tried to address housing bubble fears by supporting Mark Carney’s earlier position. The Chancellor is clearly concerned not to cause a bubble I thought at the time. Hmm.

Then, on the eve of the Tory conference, funny that, George Osborne comes out and says they are bringing forward the Help2Buy guarantee scheme from January to almost immediate effect. As I spoke to a BBC researcher on Saturday night (admittedly through a haze of Sav Blanc), we pondered why. There could be no good timing reason for this from a property perspective. The market is close to slowing for Christmas. January made sense.

Suddenly there are reports of high street banks staying open late. Mortgage Brokers I know are in a state of panic as phones ring off the hook, (and suggest lenders aren’t ready even for January). Buyers are calling me saying they need to buy quickly before prices go up. Vendors are visibly digging heels in on what last week I regarded as inflated asking prices. My clients with homes under offer are questioning if they have undersold.

The only thing not visibly changing is stock. It isn’t coming on. The estate agents phones may be ringing – but not with sellers. All in a few days.

Now I’m not an economist but I do understand simple supply and demand maths.

Rather than the ‘steady as she goes’ approach to the housing market, we’ve been delivered a political peeing contest: ‘I’ll take your energy price freeze Ed and raise you our ‘mortgages for all’ corker, Woohoo!’ (but ssh about the supply bit).
I can no longer with conviction pooh pooh talks of a housing bubble – a little political oneupmanship and I fear the supertanker is no longer on what I believed was a steady course. I am left with a sinking feeling.

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