Bog Roll ::

It's Not Magic, It's Work!

30 Jul 2009

Bad News

House prices are up again. Somehow people think rising house prices are good, yet when petrol or food goes up they are up in arms claiming that it's the end of the world...

There are three possibilities:

  1. We are at the bottom of the recession and things are looking up.
  2. We are not yet at the bottom and it's all hype from the vested interests in government and the media who desperately need things to be on the up to dig themselves out of their debt prisons.
  3. It's just the predicted "dead cat" bounce and prices will continue to fall once reality bites.

With house sale volumes so low, mortgage expensive and rare and unemployment relentlessly rising I think we are just in the middle of a predictable fool's rally. Next year the new government (of whatever shade of blue) is going to be forced to cut expenditure, raise taxes and allow the Bank of England to raise interest rates (as they are currently way too low). That will force house prices down again and the house price correction will continue.