As 2012 draws to a close it's time once again for one of my Housing Humbug Reports in which I take a look at the past 12 months in the property and financial markets and see if there are any potential gems of wisdom to be found and make a few predictions on what next year might hold.
In previous years we have squeezed everything in the one post – this year's will be split with the UK having a report all of its own. Whilst I would like to say this is due to so many positive changes – it's more a case of way too much talk and little or no action.
UK Property Market
2012 has seen a lot of noise and several changes – unfortunately though, the property market has little to show for it (my predictions from last years Humbug Report will be added where relevant).
The Get Britain Building Fund was wheeled out as a carrot for house builders to finish off any languishing housing projects. So far there has been little in the way of positive news to get excited about.
New Buy was reinvented a few times in a bid to help first time buyers get on the housing ladder by subsidising deposits. Great in principle, but as per usual there were one or two holes in the plan – the prime one being that no-one is really quite that mad to buy a house in an arguably over-priced market with an excessive loan-to-value ratio.
Right to Buy also saw some government rehashing – initially a one-for-one replacement ploy meaning that every council house sale would fund a replacement affordable home - after my grilling of Grant Shapps on Twitter it turned out this was not really the case and no-more than 30% of the cost for new builds would actually come from Right to Buy receipts.
The London Olympics created a substantial divide in the property industry with analysts at Savills and Knight Frank holding opposing opinions on what effects the Olympics would have on property prices.
In September there was a change of housing minister as a result of a cabinet re-shuffle. Grant Shapps was replaced by Mark Prisk to oversee the housing department. My hopes that the change would result in more sense, measurable changes in the housing market and that some realistic housing policies would emerge appear to have been dashed.
Whilst Shapps' ideas rarely made much sense – they were an extensive source of amusement for industry commentators. Prisk, by comparison has hardly said a word since his inauguration. One lives in hope this is because he is creating some realistic policies that will help the housing market, however, I have my doubts.
Buy to Let is still making headlines for one of two reasons. Either "It's the next big thing and you can make a fortune" if the headline is coming from the lending world, or, "Buy to Let is killing the first time buyer market" from the public opinion and housing association sector. The reality is that both headlines are little more than an illustrative example of how the UK media industry makes its money these days, both of which contain an element of truth – but neither is truly accurate.
In addition to the apparent moral standing on whether Buy to Let is good or evil – the "industry leaders" can't decide either as LSL and RightMove release contradictory reports with their best guess on what the industry holds for the next 12 months.
The mortgage and lending sector needs to sell mortgages and first time buyers want to buy houses. The problem is, as I have said many times, the errors made in the past need addressing – rather than creating new fangled solutions which help neither cause and do little more than prolong the issues.
The solutions required to restore the housing market to any kind of stability are more complex than any I have seen published so far this year. Anyone with a suggestion seems to believe they have one simple idea that will sort it all out and keep everyone happy in the process. The reality couldn't be further from the truth – at least one sector, demographic or industry has to undergo an element of sufferance somewhere along the line for there to be any kind of resolution.
My prediction for Buy to Let in the UK last year was that major changes were in the works and that a cautious approach was advised – well, little has happened in the way of regulation (for lending, letting or selling), as a result nothing has really changed much at all – it's just got a lot more tangled up in media spin.
The volume of construction in general has garnered more than its fair share of column inches this year too – often being cited as the new cure-all for affordability. "Just build more and all will be good – prices will come down and everyone will be happy" is the general suggestion, the old "supply and demand" way of thinking being the main thought process at work.
What appears to have been overlooked are the housing stats of years gone by. It turns out when you chart the volume of property built against the cost of houses – building more does not always mean prices will come down.
Last year's prediction was that little would change in the lending sector without new regulation, subsequently prices would move little as a result.
2012 however has bought about several points that do little to bolster the lending industry's credibility unfortunately.
And no-end of other nonsensical gambits have come to light from what used to be a very respectable industry.
Apparently the latest solution is on its way in the form of a new governor for the Bank of England – namely Mark Carney from the Bank of Canada. A nice idea in theory, but when you consider Canada is now starting to see the same problem the UK has – despite him warning it would happen – it goes to show you can hire all the people you want to set your lending policies, but if the government doesn't listen or enforce – no change will take place.
Predictions for the UK property market in 2013
This is a tough one. I could do a "Halifax" type prediction in which I would suggest house prices might go up or down depending on what happens – maybe by 2% in either direction – but then where is the fun in that?
I could also rustle up an attention grabbing headline like "35 % Of Brits To Buy Abroad In The Next Two Years With Spain Top Of The List" and then make it up as I go along from there.
Or, I could hash together some positive news based upon a new measurable I just made up and spun to look like good news – much like RICS have with with the rather non-news headline in PropertyWire "More optimism entering the UK housing market says RICS" (Note to self – add "optimism-o-meter" to Christmas present list)
Instead, I am going to go with a change from the norm and provide this years prediction for the UK housing market 2013 in the style of a British Rail announcement.
*BING-BONG* There will be little if any change in the UK housing market, until the different sectors that need to communicate and work rationally together actually do so, at least to some degree.
- Monday 17 December 2012