The New Normal

07/May/2013
Hilary Grayson

I went to two very interesting conferences recently – very different and yet somehow there was a common thread – the New Normal and what it could look like.

The first of those conferences was run by My Home Move, the on-line conveyancing firm based in Leicester.  Aimed primarily at the Estate Agency profession the conference was called ‘Let’s do the Numbers’ – and they did!  The morning focused on the wider economic picture and its implications for the housing market in general.  The afternoon put this into a more local context.

I took notes – I love a conference, me – and I can share some of those notes with you.  The first presentation was given by James Knightley, a senior economist from ING.  And what I took from his presentation was that the UK economy has shrunk in 10 of the last 19 quarters and our output is 2.9% lower than in 2008.  But, there are 1 million more jobs.  In economic terms that is hard to compute but does explain what the housing market has remained resilient, with markets in places like London and East Anglia remaining significantly strong.  Sticking his neck out a bit, James made a bit of a prediction – that while wages are not keeping up with inflation and thus household incomes are continuing to be squeezed, consumer confidence is showing signs of a recovery and that there is little chance of a rise in interest rates.

This assessment was carried over into the second session – which focussed more on the domestic lending market.  There are changes afoot.  The FSA has been replaced with the new FCA which brings a new culture to lending regulation and there was confidence that the lending market would grow this year (my notes suggesting that this view was stated by David Finlay from Barclays Intermediary Lending).

But everyone was absolutely clear – while house prices seem to be holding steady (there are some regional exceptions) we won’t see a return to the transaction volumes of the years leading up to 2007 (there were 1.4 million mortgage transactions that year, compared with 674,000 last year) but everyone expected that by 2017 we will have hit the ‘New Normal’ in the housing market.

My notes get a bit hazy at that point – or maybe no one was quite brave enough to actually define the New Normal – because, if you ask me I can’t tell you the number of transactions anyone was predicting for that year.

The second conference I attended was run by the Residential Property Surveyors Association (RPSA).  In case you have stumbled onto this blog by accident then I should tell you that RPSA is the body for surveyors who hold the Dip HI qualification and who are accredited by the BRE or SAVA and offer surveyors for home buyers.

And the first presentation was presented by Peter Bolton-King, late of the NAEA and now the Global Residential Director of the RICS.  I could not help but think ‘poacher turned gamekeeper’ as he gave his presentation, but Peter imparted some fascinating information.

One gem was that from research recently commissioned by RICS, 50% of buyers who commissioned a residential survey thought it was good value for money (my view? – it should have been more: Surveyors still have some work to do), 94% of those asked thought it important to commission a survey, though a third did not bother, and many of those who did not had a nasty shock averaging £5750 of unexpected repairs.

But the main bit of news, from my perspective anyway, was the fact that RICS is about to publish new routes to AssocRICS membership, and indeed from there, new routes to full MRICS status.  On its own, perhaps this is not so fascinating, but in the context of some recent work I have been doing, this is very interesting. 

The old Diploma in Home Inspection is no more and has not been replaced. If you are an energy assessor today and want to progress to become a surveyor the route is mired with complication and lack of clarity.  So, working with RPSA and BRE, I have recently been reviewing the old HI Qualification and we have a created a first draft.   RICS are interested in the work I am doing and I am hoping that we can map the new qualification against the AssocRICS competencies.  Negotiations have commenced!

In practice this could be very exciting.  It means that someone who is a qualified DEA today (and who wants to pursue a career in property) could take the new qualification and eventually become AssocRICS.  Currently the DEA qualification does not really lead anywhere, other than Green Deal.  Indeed, someone who is not yet a DEA could embark upon a practical training and work programme that eventually gets them there.

So I am going to stick my neck out and predict the New Normal for 2017.

· We’ll have a stable housing market (but I don’t think transaction volumes will be in excess of ¾ million)

· We’ll have a more buoyant mortgage market than currently

· Interest rates are going to be pretty much as they are today

· The first DEA’s to do the new Diploma in Residential Surveying will have become members of RICS and it will be accepted as a natural career path for some

· 50% of home buyers will commission an independent survey on condition, up on the 20-30% today

And if my predictions come to pass, I for one, will be very happy.

Now, I have to store this blog somewhere safe so that I can review my predictions when we get there. 

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