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BLOG: Dazed and confused – what’s really going on in the housing market?

Joanna Faith
Written By:
Joanna Faith

Unless you’ve been cocooned on a desert island, it’s been hard to miss the palpable excitement resonating from the apparent recovery in the housing market.

And nothing says revival more than an influx of ‘good news’ stories.

With headlines like “Mortgages at their most affordable for 14 years”, “Consumer confidence in the housing market hits a new peak”, “House prices continue ‘brisk’ rise” and “Mortgage lending soars to five-year high”, you’d think we were back to pre-2007 boom times.

But scratch below the surface and it’s not all good news as evidenced by a similar number of negative stories out over the past week or so.

HomeLet research told us that tenants in London, Scotland, the North West, the East Midlands, Yorkshire and Humberside and Wales are paying record high rents.

This is bad news for the two million families in the UK which, according to a Shelter report, are being priced out of the market and forced to stay in the rental market.

It is also worrying for first-time buyers struggling to come up with the monster deposits needed to get on the housing ladder. A Council of Mortgage Lenders study informed us this week that in London the average first-time buyer has to put down a record £64,000.

Of course, much of the renewed confidence in the mortgage market has been put down to government intervention with schemes such as Help to Buy.

Although the initiative has helped get more people onto the housing ladder, the worry is this will come at a cost.

Bank of England governor Mark Carney has come out saying he will step in to prevent a new housing bubble but even mortgage industry professionals believe government initiatives could overinflate house prices.

Research by the Intermediary Mortgage Lenders’ Association revealed that 60% of lenders and 59% of brokers identify a potential house price bubble as the single factor most likely to undermine the government’s latest housing scheme.

So where does all this leave the consumer? I think confused may be the word.

Joanna Faith is editor of Your Money