What happened in the last three months??
Until the second quarter of 2009 (Q10), the current house price crash had been tracking the previous one very closely, so this quarter I was expecting prices to fall slightly - but they went up. It appears that the Tories are determined to keep the bubble inflated, but surely they can't have had that much impact?
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.
Source: Nationwide's UK House prices adjusted for inflation (choose from the drop down box labelled 'UK series').
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3 comments:
Possibly the effect of interest rates well below the rate of inflation - you have to put the money into something. Also explains the stock market not bombing. Of course it prevents long term investment in anything productive but it keeps the banks solvent. Basically repeating Japan's recent history.
If that's CPI adjusted you could adjust by RPI and it might be more similar, otherwise you could try to argue that RPI understates 'real' inflation?
Or how about the huge devaluation - this didn't happen in 1989 'til a bit later.
NC, indeed, Japan is what our government is trying to achieve. It's not clear to me why, but hey.
M, from one quarter to another CPI or RPI isn't much different (I think), so adjusting would be probably pointless.
Interestingly, the 1992 election and the 2010 election both fell in the 14th quarter on that chart (so we can ignore those).
The big devaluation the first time was in the 15th quarter and this time it was in the 8th (i.e. last quarter 2008). But, do we assume that a devaluation pushes house prices up or down? You can argue it either way (imports up, so money to spend on houses down - or - sterling cheaper, so sterling denominated house prices get bid up by Johnny Foreigner?)
I think the only big difference is the £300 billion taxpayer funded/backed bank bail out we had this time. At least on Black Wednesday Normant Lamont threw in the towel after losing £2 billion or so.
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