Friday, 10 February 2017

Almost there, but still wrong

Open University expert, Alan Shipman says that the Government are looking at "the wrong part of the ratio" when it comes to the high house price to average earnings multiplier.

Whilst it's good to see that someone else is pointing out that it's not down to a lack of supply, it's still depressing that he has failed to grasp that it is interest rates that are the problem, not earnings.

No mention of LVT, either, unsurprisingly.


Mark Wadsworth said...

It seems like a ghastly mix of completely wrong and spot on accurate.

Lola said...

It's an overabundance of easy and cheap debt (credit is what you have, debt is what you get) that drives all asset prices, including land. As Austrians say 'inflation is the result of the unwarranted expansion of money and credit'. All this QE and ZIRP has to end up somewhere.

Apropos of which, talking to a neighbour yesterday who lives in a huge house with several acres and is contemplating selling, was told by a local Estate Agent that she had a list of 29 people with cash ready to buy now. All ex London or working there. My view? Probably all enjoying huge bonuses from the QE trade.

Sean Vosper said...

There's also this:

Bayard said...

Mark, you are less charitable than me, but yes.

Lola said...

The Prof has made the usual partial analysis. Starting what I think of as halfway down the argument. We need to go back to first principals.

Intriguingly he also authored this..