What to make of the mixed messages from the property market?
Earlier this week Nationwide reported prices up a more than robust 11% and today Taylor Wimpey was so upbeat you would be forgiven for thinking we were in the middle of a boom. Housing crisis? What housing crisis?
Yet mortgage approvals are slowing down and borrowing costs are going up. Tomorrow the Bank of England is likely to add 50 basis points to its cost of borrowing. Something has to give surely?
It will come in due course — but not at a time of full employment, still historically low mortgage rates and a thirst for ownership that massively outstrips the ability of the market to deliver new homes. Hence the happy days at Taylor Wimpey.
Any correction will be far further into this cycle, at the point that job insecurity starts to gnaw away at confidence and interest rates get closer to “normal” levels. That’s when prices will finally start to falter.
Even then, for London at least, there is a safety net.
The world has come to regard London as one of its most desirable asset classes over the last 30 years.
With sterling so weak London prices still look attractive to overseas investors. Any weakness in the market will trigger a rush in bargain-hunting that will cushion the fall.
That is reassuring for owners but frustrating for the wannabe buyers waiting in hope for an early Nineties style wipe-out that would give the chance to clamber on the ladder.