Despite the fact that John Major's Tory government was quite ruthless about allowing house prices to readjust to an affordable level and Gordon Brown's Labour government is equally ruthless about pursuing a Home-Owner-Ist agenda to keep house prices as high as possible, by, for example, keeping interest rates as low as possible; bailing out banks; and making it very difficult for mortgage lenders to repossess (all at a massive cost to the taxpayer, of course), the overall house price trend has been much the same:
The blue series shows quarter-on-quarter price changes from Q1 1989 onwards; the red series shows quarter-on-quarter price changes from Q1 2007 onwards. The post-1989 crash continued for another few years after the end of that chart, but rises and falls were no longer so spectacular. Which also serves to remind us how little influence governments really have, if nothing else.
Source: Nationwide's UK House prices adjusted for inflation (choose from the drop down box labelled 'UK series').
Tuesday, 13 April 2010
History repeating itself ...
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5 comments:
If you look at everything that humans do in their effort to survive and procreate it is all governed by markets and all markets are self correcting. People can manipulate, distort and influence but despite all efforts the markets will always return to balance. So it is with the housing(shelter)market the measures that Labour put in place to shore up the market can only be short term the tipping point will be reached eventually. It has now reached that point I believe and further dramatic falls are inevitable.
If only socialist would accept that premise then they would refrain from their madcap social and economic meddling.
All the delay is just "investing" in the recession.
Stall soon after the credit tap gets switched off.
Except if you sum up those changes the 1989 one comes to a fall of 28%, and the 2007 one 14%, which is quite a big difference (it would take until Q1 2000 to get back there from 1989)
M, that is true, but the post 1989 crash lasted for five or six years (another two years after the end of that chart) and the post 2007 crash has only been going for two years so far, AND our govt has been doing its absolute best to prop up house prices.
My figures of 14% and 28% were over the same timeframe, ie 3 years. But yes, the market could easily turn down again. However if you index Q1 1989 and Q1 2007 to 100, there's a clear difference that (one assumes) the governmetn has made (or perhaps the devaluation has made)
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