When politicians and commentators scream about soaraway house prices, it’s obvious that they aren’t seeing the bigger picture.
“They talk about a bubble and the need to cool the housing market, but which housing market are they talking about?” says Kevin Hollinrake, MD of Hunters estate agents.
“There’s a completely different set of circumstances in prime central London to those in the rest of the country. The market is not homogenous, though you would think so because there is such a London-centric view of it.”
He adds that although sales and values are buoyant in Yorkshire hot spots, like York and Harrogate, prices there are only about five per cent higher than their 2007 peak. In other areas, including Bradford, Hull, Doncaster and parts of Huddersfield, they are yet to reach their 2007 values.
“Our figures show that sales volumes are up 40% and prices are up 10% year-on-year in sought-after areas like York and Harrogate, but that only represents 5% growth in seven years. You can’t call that a bubble,” he says.
The Rightmove asking price index for May shows Greater London up by 16.3% year-on-year, while the rest of the country has a more modest average of 4.9%. The North East has seen 0.1% rise and Yorkshire prices have increased by 4%.
The over-heated capital has led to calls for Bank of England governor Mark Carney to raise interest rates immediately and for the Government to scrap its Help-to-Buy mortgage guarantee scheme, which enables those with lower deposits to access mortgages.
“I can understand it in prime central London but not in Yorkshire or places like Teeside, where we still have areas that aren’t firing on all cylinders,” says Kevin. “As for Help-to-Buy, it shouldn’t be scrapped altogether. They should look at regionalising the scheme, according to need.”
Mark Manning , of Manning Stainton estate agents, adds: “There has been a definite improvement in prices and sales are up. We have seen them rise six per cent in Leeds since the start of the year but even in this city, there are differences and in some parts of the south side they have only risen one or two per cent. It’s hard to equate that with some of the headlines about a house price bubble.”
Another issue that is truly nationwide is the long delay in getting a property from sale agreed to exchange of contracts. What used to take an average of nine weeks is now taking at least 12 weeks. A lack of surveyors and conveyancers is partly to blame, along with demands from mortgage lenders.
“We lost a lot of experienced surveyors and conveyancers in the recession and firms are struggling to recruit the talent needed now that sales volumes are increasing ,” says Mark.
The other big problem is the mortgage market review that requires lenders to do more affordability checks. Lenders are extra cautious and more detail is required throughout the process.
“That means that sellers are getting frustrated and sales are falling through. We had a bungalow that sold for £215,000 at the beginning of the year. There was a delay with the buyers’ mortgage so the vendor put the house back on the market and sold to someone else for £230,000,” says Mark.
Kevin Hollinrake agrees: “There is a log jam. The time from agreed sale to exchange of contracts was 56 days and now it’s 76, so it is taking about three weeks longer on average,”
The problem is driving some sellers to put their homes under the hammer, according to David Pank, MD of West Yorkshire Auction House: “Everything has slowed down because of the skill shortage and the mortgage market review, which is why people are looking at auctioning their house. It works brilliantly for certain properties, especially those with some potential or anything you could turn into a buy-to-let.
“We had a property recently that had a guide price of £70,000 to £80,000 and we got £114,000. The deal is legally binding when the hammer comes down so there is no chance of it falling through and there’s no haggling. We had exchange of contracts in four weeks and completion in eight.”