Tag Archives: house prices

Financial markets turn from servant to master for the UK

Ever since the Brexit vote, financial markets have had an uneasy relationship with the UK. The pound fell sharply after the vote to leave the European Union in June 2016, which surprised many in the City, and since then, UK financial markets have been volatile, trying to price in the consequences of this decision.

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Why I hope Liz Truss is lying

Liz Truss, the favourite in the race to succeed Boris Johnson as prime minister, has laid the blame for inflation at the door of the Bank of England, saying it must do more to fight price rises.

Truss also said she would change the Bank of England’s mandate if she becomes prime minister, to ensure that the central bank fights inflation more efficiently, but gave no details about what that change would entail.

With consumer price inflation hitting a 40-year high of 9.4% in June, you may think she has a point. The Bank of England is behind the curve, but when it comes to changing the central bank’s mandate, I really hope Liz Truss is lying. If she is not, then we should all be very afraid.

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Watch commercial banks’ interest rates for clues on the future

While all eyes are on what central banks will do with interest rates, consumers and investors alike should really worry about what commercial banks will do.

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Bank of England doubles down on house price inflation

This may not be the main thing that financial markets are looking at right now, but the Bank of England has announced it is thinking of removing another hurdle from the path or house price inflation.

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Housing wealth soars while productivity lags

A century ago, the roaring ’20s were a time of hedonistic excess. After the horror of World War I, people wanted to rebuild, but also to forget. Wealth increased, and so did prices.

While we like to think we are smarter, or at least more knowledgeable than 100 years ago, there are worrying similarities between the two periods. If anything, the excesses this time around are much greater.

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Consumer price inflation or house price inflation? UK has to choose

The perfect storm is brewing for UK inflation. Boris Johnson and his government will not admit it, but their choice of a hard Brexit will exacerbate price rises, on top of the effects of the Covid-19 pandemic.

This could put the Bank of England in the unenviable position of having to choose which bubble to burst: consumer prices, or house prices.

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ECB pays lip service to worries about inflating a housing bubble

The European Central Bank (ECB) raised its inflation target last week, at the same time going to great lengths to try to persuade people that it did not.

In the process, the central bank also stated that it will find a way to deal with an issue that is increasingly pressing: that of runaway house price inflation.

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How to make renting attractive in the UK

Central banks have been busy saving the West from its own excesses since the great financial crisis of 2007, but in the process, they have made housing unaffordable for young people, particularly in the UK.

House prices have surged in many UK cities, with record low interest rates and money printing making homes more affordable for “investors” and less so for those who actually need them as places to live in, as opposed to assets to speculate on.

Despite record low mortgages and various subsidies, homeownership is increasingly unaffordable for a rising number of people.

The consequence is deepening inequality, which makes the UK look more like a feudal, rather than modern, society.

One of the ways to tackle the so-called “housing crisis” would be to make renting an option perhaps as good, if not better, than buying a property.

Here are four ways in which the UK government could go about making renting a truly affordable option for young people in the UK – and a few of the reasons why it will never do it.

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To fight inflation, wealth needs to be taxed more

Even though the vaccines have the potential to reduce the Covid-19 pandemic to manageable levels, the scars will be felt for years to come.

Beyond the tragedy of the loss of human life, deepening inequality is perhaps the worst consequence of the pandemic. Governments around the world will seek to take steps to reduce it, fearing civil unrest.

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House prices are becoming red hot, and this is scary

House price growth is accelerating in the UK and the rest of Europe, but it is far from healthy growth. The consequences of lax rules on lending to house buyers could be devastating.

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