BLOG: house prices: up, up and away?
Of course, any national average figure is fundamentally flawed as a cursory analysis of the market reveals. Every city has areas that outperform others, and in much the same manner, the South East continues to outperform the rest of the UK. It’s important to note however that these national averages are not about accuracy but about confidence in the market.
Halifax and Nationwide both report national price movements which are based on their own data, and while these national indices are important for ‘feel good’ factors – the stuff of dinner party conversations – they typically don’t offer any insight or understanding into the broader UK property market issues.
But the good news looks set to continue.
During his tenure over the last seven years, the governor of the Bank of England, Mervyn King, and the Chancellor in situ, George Osborne, have publicly at least, been in alignment about monetary policy; however King’s view has always been that he would like to see a deleveraging of all asset classes, including housing.
Osborne however realises that this would be political suicide as the national psyche and financial well-being (and consequently votes) are inextricably linked to the perceived value of property. The Chancellor’s recent raft of new measures aimed at helping buyers, whether in reality they are effective or not, bear testimony to its political importance.
In contrast, the new governor, Mark Carney, has a track record in Canada of helping home owners and house prices. His remit in the UK, with an election two years away, will be very similar. While these measures will help the market, monetary policies alone cannot fix it and so fiscal initiatives and policy ideas (such as the changes to permitted developments) will further fan the flames of recovery.
Our supply and demand issues in the UK housing market have never and presumably will never be addressed, so affordability has to be about enabling people to pay market rate rather than trying to artificially kill UK demand while allowing international demand to remain strong.
House prices help us feel rich. If we feel rich then we spend and the last pillar of economic recovery will be rebuilt.