The raspberry vs the big bang
Watching self interestedly the residential property market over the last 5 years I have been reminded of a children’s party. Lots of balloons floating about and the odd whoopee cushion to boot. With all that uncoordinated energy you are constantly expecting a loud bang as an over unenthusiastic child or more likely adult’ probably playing musical chairs accidentally plonks their substantial bulk on an unsuspecting balloon in their haste to secure a seat. Bang! You are left with a room full of stunned & embarrassed adults with jelly on their faces.
A more preferable and less jarring expulsion of superfluous air would be achieved by the same posterior landing on a misplaced whoopee cushion. As some one who doesn’t like shocks or loud bangs I always pray for the latter – not least for the comic value. As someone bought up on the subtleties of the carry on films and the Two Ronnies ‘phantom raspberry blower’ a well formed raspberry still raises a titter!
I bring this up because the housing market over the last few years has been finely balanced between blowing out with an almighty bang or slowly deflating with a gentle hiss and some mildly embarrassing toilet noises. The omens a few years ago weren’t good. If we delve into the history books the UK housing market has been characterised by a series of rapid booms followed by equally rapid busts.
There have been 3 major booms in the last 35 years. The first in the early 1970’s, then the ‘Lawson Boom’ at the end of the 1980’s which was partly fired by the scrapping of joint tax relief. The most recent is the one we have just experienced. Beginning in London in the mid 1990’s until well into 2005 in some of the far flung parts of the UK. In fact you may not have been aware that Cupar in Scotland was the best performing town in the UK over the last year with a staggering 36% increase. The top 4 performing towns according to the Halifax House Price Index were all in Scotland.
In previous times – the 1970’s and 1980’s the ‘boom’ was followed by bust as real prices fell. However, this falls were prompted in part by a weakening of the wider economy. This time things appear to be different. Employment levels are high, the economy appears relatively stable and growing so it appears that a raspberry is in order to all those doomsayers who were predicting 10 or 20% falls. However, the pessimists would point to other factors such as affordability, high levels of personal debt as reasons why prices still could fall. Both these factors have done much to undermine the activities of the first time buyer. These have traditionally been the buyers of the 1st rung in the property ladder and therefore the engine of the rest of the market. Therefore, whilst things appear to have slowed in an orderly fashion there are those that are still convinced that there is a nasty ‘bang’ waiting in the ‘wings’!