HOUSE PRICES WILL STOP FALLING AND RENTAL SECTOR SET TO BOOM THIS YEAR, EXPERTS AGREE

House prices will stop falling this year, leading figures from the property industry agreed at the Land Data Great Housing Market Debate, hosted by the Wriglesworth Consultancy, held in London this week. However, the panel were unanimous in their belief that it could be a case of “green shoots, no roots” if the partially nationalised banks do not enable lending to return to healthy levels. A main consideration of the Government must be guaranteeing longer term stability and discouraging the boom and bust culture that has previously been the norm.

The panel also predicted a major expansion of the private rental sector, driven by a surge in demand from young people continuing to rent much later in life due to the need to save larger deposits following the recent change in lending criteria and the end of 100% mortgages.

David Miles, Chief Economist at Morgan Stanley, said: "Reduced loan to values will bring about an increase in the age of the average first time buyer, as we return to a culture of saving for deposits. This will probably mean that the private rental sector will need to expand through private buy to let landlords or professional investors."

John Heron, Managing Director of Paragon Mortgages, speaking from the floor, added: "The small scale private landlord remains critical for supply and will drive rental sector expansion over the next five years. The Government must show its support for the industry by ensuring that any measures to support struggling property owners, such as the new Mortgage Guarantee Scheme, apply to landlords as well as owner occupiers."

Keshav Thukaram, Managing Director of sponsor Smartlandlord.co.uk, underlined the importance of attracting new investors to the sector: “Falling interest rates and prices have made it increasingly possible for much needed buy-to-let landlords to enter the market.”

House building targets must be flexible
One member of the panel called upon the Government to aid recovery by being flexible in its housebuilding targets, which are looking increasingly difficult to meet. Kate Barker, MPC member and author of the 2004 Review of Housing Supply, said: "The existing target of three million new homes by 2020 is incredibly difficult to meet. When the housing industry was booming, we still only achieved around 200,000 additions to the housing stock in one year, which raises the prospect of prices rising sharply again in the future. Going forward, local authorities will need to be more flexible on planning policy and be capable of processing planning applications more quickly when demand returns."

Grenville Turner, Chief Executive of Countrywide, reiterated calls for a rethink of Government targets. He commented: "Housebuilding targets have motivated the wrong kind of behaviour, resulting in a distorted mix of new homes and an oversupply of apartments in particular."

Experts call for stamp duty to be scrapped
Just 48 hours before the Chancellor was due to present the Budget, the majority of the panel called for stamp duty to be scrapped. David Miles said that stamp duty had obvious disadvantages because it was a tax on transactions and he saw advantage in it be replaced by a tax on the value of property. Kate Barker also wanted to see increased spending to support social housing and renewed spending in regeneration areas.

HIPs need improving but here to stay
The debate inevitably turned to the controversial topic of Homes Information Packs, with a sizeable 70% of delegates voting in favour of HIPs being adapted and improved, rather than scrapped entirely, in a straw poll.

The panel unanimously agreed that while HIPs has been poorly implemented, they should not be completely cast out should the Conservatives, who are fully committed to scrapping HIPs, win the next election.

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Notes to Editors

About the Land Data Great Housing Market Debate 2009

• The Wriglesworth Consultancy’s fourth annual housing market debate, The Land Data Great Housing Market Debate, was held in association with Land Data and supported by Council of Mortgage Lenders, Countrywide plc, Propertyfinder.com and Smartlandlord.co.uk.
• The panellists were Kate Barker, MPC Member, David Miles, Chief Economist, Morgan Stanley, Michael Coogan, Director General, Council of Mortgage Lenders, BBC’s Chief Economics Correspondent Hugh Pym and Grenville Turner, Group Chief Executive, Countrywide.
  

About The Wriglesworth Consultancy

• The Wriglesworth Consultancy was founded by John Wriglesworth in 1998 and is now one of London’s most dynamic and successful PR businesses. The agency specialises in city, corporate, property and personal finance PR. For more information visit: www.wriglesworth.com