Michael Fiddes, head of agency at Strutt & Parker, gives his reaction to the announcement from RICS suggesting that the BoE should cap house price growth at 5% pa.
Fiddes said: “Today’s surprise announcement by RICS, suggesting a cap on house price growth as a way of tackling economic risk taking and debts, is a facile one. As a member, I am concerned that RICS has shown a lack of understanding of the housing market.
“It is important to realise there is not a uniform property market in the UK. To understand the market, it is imperative to consider all sectors and all geographical areas, and London and the SE have seen rises greater than the rest of the UK.
“Although there is talk of a price bubble, which I believe is hyperbole anyway, it doesn’t feel like that across all areas of the UK. The London market, which has seen the greatest price surge, has lots of cash buyers and the RICS policy suggestions do not affect these types of purchasers. Trying to limit areas that are seeing the highest price growth means other regions may suffer as a result.
“If you try to cap house loan to income ratios, an instrument that RICS is suggesting, all you’re doing is distorting the natural movements of the market. I don’t believe that trying to influence the basic laws of supply and demand is the right way of tackling the problem.
“If a bubble is being created, one of the main causes is the Government’s help-to-buy scheme. What we need to do is see a stable market where housing is affordable and if we can get the supply and demand levels correct, then a free market will find its own level. It feels like RICS is proposing a remedy to the help-to-buy, but you cannot cure a wrong with another wrong.”