My faith in the housing crash has been restored. I know I have wobbled. I did begin to doubt, but this data tells me that the prospects for a recovery in the housing market are bleak.
Why? House prices can only rise if there is a sufficient flow of net credit into the market. This chart, which tracks new loans minus repayments, tells us that credit into the market has stalled.
Only when net flows of secured lending begins to seriously increase will house prices begin to rise again. In May, net lending was about as low as it could be without turning negative.
I wonder what the jokers in Westminster and Threadneedle street made of these numbers? Despite all the crazy bailout schemes, guarantees and liquidity those banks still won't lend to the housing speculators.