Wthether it’s a sign of Spring or the green shoots of recovery, recent activity in the UK housing market has seen an appropriate response from the major UK home insurance companies, with a multi million pound spend on prime time TV advertising.
The home insurance market had gone quiet in recent months but recent positive indicators in the housing market have led to this bombardment on every TV and commercial Radio station. Home Insurance is definitely the flavour of the month with the market under capacity due to many people cutting levels of cover or dropping covers completely because of the recession.
So what’s been happening in the UK housing market recently to have caused this big budget spend?
Well in April house prices had risen by 8.5 % since January which is a startling recovery in itself, and the figures for the number of valuations carried out in May confirm the trend with Valuation activity in May up by over a quarter compared to May 2009, according to the latest research by Connells Estates Survey team.
This confirms that both the supply side of housing and the demand side from potential buyers appear on the face of it bouyant. It remains to be seen if the Bank Assurers are prepared to underwite this economic activity with the supply of mortgages necessary to complete all these potential deals.
The most up-to-date figures currently available from the Land Registry show that during February 2010, the number of completed house sales in England and Wales rose by 49 per cent to 40,502 from 27,190 in February 2009. It will be interesting to see if there were as many sales during the period since February of rising house prices.
The new Government are also sending out mixed messages about the housing market.
On the one hand they have scrapped the regional development of 600,000 houses for low paid workers around the country, presumably to let the vacuum be filed by property developers.
Then on the the hand they intend to hit the private landlords and developers hard in the pocket with large increases in Capital Gains Tax.
Some commentators are saying that 30% of the housing demand is from private investors and forcing a CGT tax-hike on property investors will drive many from the housing market at a time when its recovery is still perilously fragile.
What utter tosh – these are the same people that have seen the values of their properties increase by 400 percent plus over the last ten years. Some of these so called investors, whose greed initially generated the demand that created the massive price rises and forced ‘joe public’ out of the market, own portfolios of 10 20 30 or even 500 properties!
Either way the home insurers are not bothered, because where they once sold a specialist home insurance product to a Landlord they can now sell a standard home insurance policy to a home owner.
Were they all bankers at Monopoly when they were kids?
These people are just as much to blame for the current recession as the Banks that made credit readily available for them to play their easy money games. The toxic debts were only toxic because house prices were artificially inflated by these pariahs and normal people looking for a home were tricked into buying into negative equity without even realising it!
Personally Insurance Blogger thinks CGT should be raised even higher! Those who made all the profits that caused this recession should be made to pay now!
As for the detrimental effect on the housing market and possible falling prices leading to new negative equity….
Well that’s market economics for you and you can only temporarily stop the deflationary pressures that must happen in order to bring new entrants to the market. A market that sorely needs affordable housing where the profits are not going into the hands of a few un-entrepreneurial feudal landlords!