Property bubble

One of the largest house-builders in Britain recently dismissed fears of a housing bubble as it reported booming demand for its new homes.  The House builders revenues jumped 21% last year after it sold nearly 12,000 homes and that is with sales 30% higher in the second half than the first. One of the rival companies also have record profits for the six months to the end of December so it seems that the industry is starting the new year in a really bullish mood.  all this came as figures from the mortgage lender, Halifax, showed house prices had dipped 0.6% in December but are still 7.5% higher than a year ago.

The whole of the housing market has had a remarkable recovery after many years of stagnation boosted by increased mortgage lending and assistance from the state-backed schemes such as Help to Buy.  Many people think that the revival has fuelled a housing bubble and this has caused the Bank of England to scale back the funding for lending scheme so it no longer applies to mortgages.

Some of the large house builders say they don’t think there is a bubble, they say they cover the whole of the country and think the pricing is stable across the board.

I think the main thing is that if wages increase inline with house prices there should not be a bubble, but as we know this is not the case so people buying property when interest rates are at record lows, it would not take much of an increase to make things very difficult for a lot of new home owners who are pushing themselves to all time highs in prices. One thing is for sure interest rates can only go one way at the moment, so as I have said in the past it is a good time to fix a good rate with your lender.

Richard Butler-Creagh

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About Richard Butler-Creagh

Career & Henley Finance Ltd

Posted on January 21, 2014, in properties, Property Business, Richard Butler-Creagh, right to buy and tagged . Bookmark the permalink. Leave a comment.

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