Bubble fears too high - the housing market is ordinary

The Council of Mortgage Lenders (CML) has announced that gross mortgage lending remained steady in August at an estimated £16.6bn. (Release)

In July, the figure was £16.7bn and up 28 per cent from August 2012 (£13bn).

Not unexpectedly, the CML highlighted that:

Prospects for the UK economy continue to brighten, although there is a risk that expectations are running too high. The housing market is in the early stages of what appears to be a relatively benign and broad-based recovery. With little pick-up in net lending to individuals, talk of housing booms is premature, and speaks more about housing supply shortfalls than the current strength of demand.

(CML)

CML chief economist Bob Pannell commented today:

One tell-tale sign of a recovering housing market is the re-emergence of concerns about a housing boom… But, as we have argued elsewhere, the housing market recovery to date appears fairly unexceptional in nature, at least compared with that of the early-mid 1990s.

(CML)

Jonathan Harris, director of mortgage broker Anderson Harris, says:

Surprisingly, given all the talk of an overheating housing market, gross mortgage lending was steady in August compared with July. This is extremely encouraging, suggesting a sustained and considered improvement in the housing market, which is more likely to lead to a measured recovery, rather than a house-price bubble.

The economy is turning a corner but let's not get too carried away: there is still a long way to go. The danger of over-reaction to a house-price bubble is that any confidence in the market is extinguished just as it is establishing itself. Lending volumes and house prices are still well below pre-crisis levels.