South-east Surge Bolsters Property Prices

[Smell the Fear]

Does anyone have access to FT.com? There was a large article on the US property slide, and comment on whether it would happen here. Had a quick look at it in Sainsburys, and there was a comment from an analyst/fund manager or some such stating that UK was overvalued, that it would slide, but timing it was very difficult.

"South-east surge bolsters property prices

By Scheherazade Daneshkhuand Chris Giles

Published: September 9 2006 03:00 | Last updated: September 9 2006 03:00

House prices rose by 5.7 per cent in the year to August, led by the mini-boom in London and the south-east, according to the FT house price index published yesterday.

Across the Atlantic however, house prices are rising at their slowest rate in 30 years, sparking fears that the market could be headed for a crash."

FT article

[gasket37]

here is a summary - it is actually not that bearish , until you get to the bit at the bottom:-

"House prices rose by 5.7 per cent in the year to August, led by the mini-boom in London and the south-east, according to the FT house price index published yesterday.

Across the Atlantic however, house prices are rising at their slowest rate in 30 years, sparking fears that the market could be headed for a crash.

The adage has it that when the US sneezes, the UK catches a cold. Will that hold true for house prices?

The UK housing market went into its slowdown earlier than the US. But in contrast to the US, the UK market has shown no sign of flagging in recent months.

Acadametrics says: "We expect to see a steady and stable performance from house prices and activity across the country in the remainder of 2006."

In the UK, annual house price inflation peaked in 2004 at 15.2 per cent on the FT index, and then slowed steadily to its low point last autumn, before picking up again this year.

The central question now is whether the US and the rest of the world economy will remain robust.

John Calverly of American Express bank, who this week published a study of the US, UK and Australian housing markets*, expects UK house price growth to remain steady rather than spectacular.

"A rise in UK interest rates later this year, which looks likely, will probably choke off the current pick-up in the housing market," he says.

Mr Calverly believes that the UK housing market is a bubble that will eventually burst; he just cannot predict when. "The experience of most housing booms is that when prices get out of line, they can stay that way for a long time," he says. "The correction happens when you get a recession."

With both the US and UK economies still performing relatively strongly, there is no trigger yet for a crash.

But Mr Calverly says that when "we see a UK recession: then I would expect a 20 to 30 per cent decline in prices".

[* should be interesting!]

[Lionel Richtea]

John Calverly of American Express bank, who this week published a study of the US, UK and Australian housing markets*, expects UK house price growth to remain steady rather than spectacular.

[* should be interesting!]

It's amazing the focus that the world puts on the Australian housing market which the size of a gnat's bite on the bum of the world. All that analysis and navel gazing... I only look at it because I am exposed but God knows why the rest of the world expends all that energy.

If you want to look at something anitpodean as an indicator of anything that might possible effect the UK, look at the Aussie Dollar which is volatile as hell due to the small size of the economy and a real resources / China bellweather.

Lionel