Wednesday, 12 December 2007

The bubble is back on; the crash is cancelled

(click on the chart for a crisper image)

It took just one interest rate cut of 0.25 percent, and sellers have "regained their confidence'. Asking prices in the England and Wales increased by 1.1 percent in December.

According to, a majority of home sellers believe that the recent interest rate cut will be the first of several from the Bank of England, which will revitalize the bubble, and return us to those glorious days of double digit house price inflation.

To be fair, did warn that sellers could be seriously disappointed. Mortgage lenders have tightened up, and the number of approvals are way down. Sellers may ultimately find that their overpriced houses will just sit idly in estate agents windows.

The Bank of England must be happy. Since its primary objective is now maintaining high and stable housing inflation, today's news must be very welcome indeed. With a few more cuts, housing inflation could easily return to the desired double digit level, which the Bank achieved during most of the last decade.

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