Thursday, November 5, 2009

Allister Heath talking sense (for a change)

Bubblenomics is back with a vengeance

"Earlier this year, I wrote a column in this space arguing that the housing market in the UK was no longer over-valued, based on historic price to earnings ratios and a range of other evidence, including the fact that yields on rented flats were higher than mortgage payments again. I spoke too soon. Since then, house prices have jumped by about five per cent, taking the trough-to-peak rise this year to around seven per cent, which is ridiculous and cannot be justified by the fundamentals. Unfortunately, this means that house prices are now clearly over-valued again, with home owners and investors convincing themselves that property is once more a one-way bet (a deeply dangerous conceit)...."

Posted by mark wadsworth @ 10:17 AM (871 views)
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3 thoughts on “Allister Heath talking sense (for a change)

  • Good to see Allister Heath no recognises that house prices are over-priced, despite saying they were about right a few months ago. I realise that technically these two positions are not contradictory (as prices have increased further over the last few months) but it does illustrate how the media will change their story frequently in order to give themselves something to say in their daily /weekly columns.

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  • ‘It would be better for us to suffer very low growth or stagnation over the next couple of years rather than unsustainable growth followed by another collapse in 2012 or 2013. The global economy simply could not cope with that; some countries would go bust and others, such as the UK, would have to hyper-inflate themselves out of a sovereign debt default. Another bubble and bust would be a total catastrophe, which needs to be avoided at almost any cost.’

    This guy looks like he’s been reading my postings! The second crash will be worse than the first and lead to total collapse is what I said.

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  • So only a 7% rise takes prices from affordable to clearly over-valued? I would suggest that this means they were are never affordable in the first place.

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