Thursday, October 1, 2009
Fudamentals don’t matter
We've already commented about the unlikely possibility of unemployment having any significant negative effect on house prices in this recessionary cycle. Assetz just don't think it's going to outweigh the effects of significant lack of supply. We've now got the government admitting that long-term unemployment is going to be massively lower than previously predicted. House prices are not going to be pushed down by unemployment in the private sector, and by the time any public sector job reduction kicks in, private sector recruitment growth will be endemic, helping helping to cap peak unemployment. We are already seeing the companies that entered the recession early beginning to hire staff again, and we expect this flow to continue.