Rightmove says little sign of UK housing bubble

by **Cals** Mon 18 Nov 2013, 15:30

Published: Monday November 18, 2013 MYT 12:43:00 PM
Updated: Monday November 18, 2013 MYT 12:45:31 PM
Rightmove says little sign of UK housing bubble
LONDON: Fears that Britain's housing stimulus schemes are inflating a price bubble look overblown according research by property website Rightmove, which cited evidence of strict lending criteria.
The government has introduced two schemes to help revive a property market that crashed in 2008 but, as an economic recovery takes hold, some worry the stimulus could overheat the market and pose a new threat to Britain's financial stability.
Rightmove director Miles Shipside said efforts by the Financial Conduct Authority were working after it introduced new rules following a review of the mortgage market to stop a repeat of the previous decade's housing bubble.
"Given the early evidence so far and with the effect of the mortgage market review then certainly fears of a housing bubble are being overplayed," Shipside said.
Visitors to their website since the second phase of Help to Buy was launched in September had risen 30 percent compared to the same period in 2012, indicating a possible release of pent-up demand to move, Shipside said.
Last week, data from the Royal Institution of Chartered Surveyors' showed house prices hit an 11-year high in October, supported by the government schemes and a shortage of properties on the market.
Mortgage lender Halifax said earlier in November average house prices in the three months to October were 6.9 percent higher than a year earlier compared to a 6.2 percent rise the month before, the biggest annual increase since May 2010.
But, Shipside said mortgage lenders were applying tougher standards to all applicants, and that anecdotal evidence showed applications for the Help to Buy programmes were undergoing rigorous checks to ensure they could afford their loans.
"The feedback from agents seems to be that you have to be squeaky-clean," he said. That meant having a good credit history and in some cases putting down a larger deposit than the minimum 5 percent required by the schemes.
Shipside said that Help to Buy was unlikely to add to rising prices in sought-after London because most Help to Buy candidates would struggle to afford property there. But he said it could eventually put upward pressure on surrounding areas unless supply of new homes was increased.
A survey of 40,000 potential buyers on Rightmove.co.uk, Britain's most visited property website, also showed three-quarters were unaware of the full benefits of the schemes.
Last week Prime Minister David Cameron said 2,000 homebuyers had obtained mortgages through Help to Buy schemes since the second phase, which provides a partial government guarantee, was launched. The first phase consists of equity loans and is limited in scope to new-build properties.
The Rightmove data showed a 2.4 percent dip in the average asking price for properties across the country in November compared to October. Although the series is not seasonally adjusted and typically dips before Christmas, this year's 2.4 percent fall is less than the average 3 percent seen in the previous three years.- Reuters