DESPITE SOME commentators painting a black picture of the housing market at present, there are still people out there buying houses: our new next-door-but-one neighbours chose the hottest weekend of the year to move in to our street. They fell in love with the house the last time it was on the market because it fitted their list of requirements to a T but they couldn’t quite afford it. And while our first conversation wasn’t really the moment to ask what they paid for it (which is why websites like myhouseprice.com are so popular these days), I do know the asking price — the asking price — was £35,000 less than the house was sold for just over 12 months ago. It is further evidence that savvy buyers will pay only what the house is worth to them, rather than what optimistic estate agents and sellers believe it is worth.
The Council of Mortgage Lenders reported this week that mortgages worth £22.3 billion were advanced during May — a rise of 3 per cent on the previous month, but still lower than the £24.1 billion in the same month last year. Of this May’s figures, £9.9 billion was lent to people buying a new home, the highest figure this year, but remortgaging figures fell for the fifth month in a row to £9.3 billion, down from £9.4 billion in April.
This drop isn’t as surprising as it might seem, because during the first quarter of the year 2.4 million personal loans were taken out, worth £13.5 billion, and according to Nationwide people collectively owe £93 billion through loans, and lending overall on loans was 1.5 per cent higher than the same period last year. For those who are staying put and doing home improvement jobs, sometimes personal loans are simply easier to arrange — and often cheaper, for a small sum, in the long run — than remortgaging.
But despite the nation’s proclivity for personal debt, it seems that more and more homebuyers are opting for the security of regular payments, with fixed-rate mortgages now accounting for 44 per cent of all new loans, the highest take-up in almost two years.
The British Bankers’ Association also reported that mortgage lending was up by £300 million on April’s figures to £4.3 billion, after redemptions and repayments were removed from the mix, while the Building Societies Association said that mortgage lending by its members was up to £3.53 billion, from £3.41 billion in April.
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As we are burdening ourselves as a nation with a trillion pounds of debt, it is no surprise that money is the main driver when it comes to our choice of house. One of the main points from a research paper commissioned by the Royal Institution of Chartered Surveyors, entitled Housing Design: A Survey and Literature Review, was that 56 per cent of respondents (residential chartered surveyors) said that cost and price was the most important factor to influence purchasers’ choice of home. Bizarrely, only 5 per cent of respondents said that the “type and design of the dwelling” was the most influential factor in house purchase choice and the majority disagreed with the statement that private developers are not building the type and quality of housing that consumers want.
There was some bad news for the Government, too, in its drive to get developers to build higher-density estates. One of the most interesting conclusions of the report, written by Barry Goodchild, Professor of Housing and Urban Planning at Sheffield Hallam University, is that “a marginal majority of residential estate surveyors believe that buying a home on a high-density estate is not in the financial interest of purchasers”. And this while flats and new-build terraced houses have generally tended to increase in value over the past ten years. The Halifax House Price Index suggests that between 1992 and 2002 the value of flats increased on average by 149 per cent and terraces by 120 per cent, while the value of detached properties increased by 102 per cent. The average rise across all properties was 112 per cent.
For all the Government’s attempts to get housebuilders to build the most sustainable and environmentally friendly houses possible, it seems that buyers just don’t care about it. Despite predictions of climate change and warnings of higher fuel prices to come, it seems that the “live now, pay later” culture is pervading almost every aspect of our lives.
But for all the reams of research into what buyers look for in a house, the best and probably most accurate report comes from Prudential. A survey by the company’s home insurance arm says that nine out of ten of us say that gut instinct is the most important indicator of whether a property is right. And of this 90 per cent, a fifth will follow their gut feeling regardless of any serious problems uncovered by a survey. A quarter of us will also sacrifice our list of requirements if we find a home that doesn’t fit the bill on paper but that has the “X” factor.
So it appears that my new neighbours are the exception, rather than the rule, when it comes to falling in love with houses. Not only is love blind, it is also headstrong, foolish and heavily in debt.
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catherine.riley@thetimes.co.uk