Wednesday, Jan 06, 2010
MP's fear the Silver Bullet
Moneymarketing: MPs fear house prices are unsustainable
Treasury select committee MPs have warned that current house price levels could be under threat if interest rates increase. In the committee’s feedback on the pre-Budget report, the MPs warn that while house prices now appear to have steadied themselves, they have done so at a level which is still relatively high compared with earnings, leaving them vulnerable to further potential shocks. In its report on the PBR, the TSC says: “House prices appear to have stabilised, but at an historically high price to earnings ratio.
Posted by jack c @ 03:27 PM (741 views) Add Comment
4 Comments
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1. alan said...
The best way to check it out is to raise IRs by the minimum amout and watch what happens. There's a monthly meeting by the MPC to do that. IRs will need to go up at some stage, won't they?
According to comments made at the foot of the article, the head of the TSC came from a teaching background, not a banking one - Its my suggestion that the TSC get back to developing some useful industry skills in this country instead of sitting back and watching the equity rise in MP's BtL properties.
MPs have a vested interest in House Prices rising because nearly all of them have a second home in the capital funded by the taxpayer. Don't worry about the constituents, just get that snout in deeper.
2. paul said...
'current house price levels could be under threat if interest rates increase'
That's an interesting turn of phrase - 'under threat'.
Makes the effort to resume normality in the housing market sound like a terrorist or foreign invader's proposition. Aaah but this is coming from a Member of 'flipping' Parliament. No wonder he's concerned.
3. mark wadsworth said...
Good comment by Paul.
But what amazes me is that ten years after houses became seriously expensive, they're only finally coming to the conclusion that prices are "at a level which is still relatively high compared with earnings" Were any of these troughers saying this two years ago, or five years ago?
4. fallingbuzzard said...
So they've only just realised that the government is now propping up a house of cards built on sand on a windy crag!