Monday, May 18, 2009

The UK housing crash is over

At least according to National Association of Estate Agents. Home sales are at their highest level since October 2007, the peak of the bubble.

Peter Bolton King, the chief executive of the NAEA said:

"Six months ago people were talking about how the British people's attitude to owning property had changed in the recession. The NAEA always said that this was nonsense, and that demand for property remained strong, but confidence in the market had gone. These figures show that this confidence is returning."

So here we go again. It looks like the bubble is about to be reflated. It took a trillion pounds of taxpayers money, a near zero bank rate, and the central bank printing cash, but eventually the crash petered out and prices are on the verge of rising again.

This is the ultimate objective of economic policy - house price inflation. Keep the middle classes happy, get them to spend and borrow, and keep everyone else in employment.


  1. Well, they would say that, wouldn't they? I'm giving it at least another year before I even think about buying.

    As DBC Reed said at HPC, the UK is a one-party state - it's run by the 'Keep house prices up at all costs' Party.

  2. I'm quite sure prices have further to fall. The effect of "liar loans" and very high income multiples was essential to the creation of the bubble which cannot be reinflated to anything like its previous extent without such loans being available again.

  3. These guys are about as credible as the National Association of Realtors in the states.

    Add to that their entitlement mentality and you get to see why we are so screwed.

  4. It wouldn't surprise me.

    Another bubble.

    I had hoped we could have got real and faced down the serious problems confronting Britain.

    Alas. People may be content again for all of the wrong reasons and at huge cost to our future.

  5. People buying now on the expectation that house prices will rise may very well be in for a bit of a shock. It's quite possible even with the monetary easing that Japan, I mean the UK, is embarking on for house prices to continue to fall. They did in Japan for about 20 years...

  6. Who in their right mind believes anything estate agents say?

  7. Surely our economy cannot continue along those lines though? Can it?

  8. If people have the future income to afford their debt and have the intention to buy a house, good luck to them.
    If they don't, bye bye economy.

  9. It's a summer bounce, an uptick after months of gloom. There is also pent up demand that is being released. But the long trend is still going to assert itself: and that is down. Why? Back to credit again. Also, right now housing construction has ground to a halt. Anyone who thinks it is politically viable to have the construction industry idle for the next five years so idiots can reflate the housing market, are dreaming. The government will have to get builders back to work.

  10. You can't be too sure that the High House Price Cult in the H of C (password "Wage inflation bad !" identifying reply "House price inflation good!")will bother about keeping the rest of the non-homeowners in employment as you state at the end.There may be a lot of geezers in white vans doing property repair/renovation work "for cash if you don't mind ,guv)but that is not factored into the equation and arrives by accident aka "The Invisible Hand".
    If they can get re-elected by just
    bribing the homeowners with steady house price increases (or now the distant promise of some),the lazy egotists ,so under-employed in the Commons, will not be arsed to do the old-fashioned grown-up politics of fighting for more jobs in their constituencies.

  11. This is a short covering rally. Of course, the "shorts", are those that sold in 2007-2008. Soon they will be "longs" again and the bear market will continue.

    Mr. Market is a cruel master.