Larry Elliott has argued in the Guardian that house prices have nowhere to go but down.
This has to be true.
Most first time buyers cannot enter the market right now. Some have suggested that first time buyers will average age 51 at some point in the near future if trends continue as now. I presume they weren’t serious. If they were they'd have failed to notice that before that happened much property would have to be lying vacant and without owners.
And unless you’re a high Tory people don’t wait around to move into the parental home.
So the market is always being replenished with property becoming vacant. It is right now. Only so much will be retained for rental – the vagaries of inheritance almost guarantee that. In this case it has to be true that eventually first time buyers determine market prices – what ever credit is available – or even because of whatever credit is available at present. Over supply will eventually push prices down. And there will be over-supply sometime at current pricing.
And that means house prices in the UK (and even more absurdly in Ireland where they remain stratospheric despite 10% being empty) will fall.
All we need to do it begin to force them down.
And yes this will create banking problems, I know. And problems of negative equity, I know. It’s either those or inflation.
Which do you want?
Rotten money has to get out of the system somehow.
There’s a choice to be made. Denying it will not avoid it.