Tuesday, 21 July 2009

Which chart do you like best?

Two charts, one housing market.

The first looks at net mortgage lending. There has been a slight pick-up in activity, but overall things are down compared to the 18 months ago.

The second chart tells a happier story. Over the last three months, the net flow of mortgage lending for home purchases is up 28 percent. It is an impressive recovery, don't you think?

So is the housing market on the verge of recovery?

For the government and the Bank of England, house prices are the number one priority. The housing market has received unprecedented support from the state in the form of guarantees and liquidity support. We may be seeing the first signs of a recovery.

If a prices are about to turn, the surge won't be a gentle one. Interest rates are dangerously low, and once people again begin to believe that house prices can only go up, we will see an apocalyptic and uncontrollable bubble.


Jo said...

Sold to you......

Jim said...

Its the same here in Sweden, where a conservative government favours owner occupation over renting, hence extra subsidies for owning as against renting and a Bank of Sweden interest rate of 0.25%.

Anonymous said...

Unfortunately when interest rates go up, as they inevitably will, we will have a second house price collapse even bigger than the first. More repossessions, more misery.

I wish two of our young nieces hadn't bought houses in the past 6 months. :-(

Anonymous said...

Surely demographics( i.e. a smaller cohort of would be purchasers) and more or less the same stock will give a much smaller number of "I have to get on the housing ladder now" types than a boom needs to take off?
If the average price rises from £160k to £240k and interest rates rise from(say)5% to 7.5% that's about £200 pw interest only EXTRA-shot in paddock-Maureen!!

mike said...

That flow of mortgage lending curve looks awfully unsustainable. Add in future interest hikes, rising unemployment and you will have a curve going the other way very soon.

Anonymous said...

Goose the housing market all you want, but it won't be able to keep pace with rising unemployment. It is not so easy to create well-paid white collar jobs in a year. World-beating companies don't just pop up in six months and start paying about £55,000/year to hold up a London mortgage. Add in ballooning public debt, and the game is not playing on the same field. No matter how many times the estate agent cinderellas click their hills.

Anonymous said...

More vindication of my decision to buy houses and rent to doomsayers like the ones on this blog! Loving these charts.

Anonymous said...

This is exactly what NuLab want.

An apparent recovery in house prices, which will run until around the late Spring of next year, when - guess what - the election will be held.

Of course, if they win the election, as now seems possible, it will be interesting to see what they do next.

Join the Euro, is my guess.