Merryn Somerset Webb explains why she still thinks there'll be a crash:
Over the long term, the price of the average house in Britain has been three times average earnings, but today one will set you back six times average earnings. This is unsustainable and I think that the market will crash. It is being kept going by technical factors and by speculation, but that can’t go on indefinitely.
But Douglas McWilliams [what a name!] thinks they'll keep bubbling away for two reasons. Firstly,
The house price is only the mechanism that brings into line our desire to create more households with our unwillingness to build more houses. The main reason why we do not build more houses is that we allow planning rules to hold housebuilding back.
and secondly, he uses an alternative definition of affordability:
Did you perhaps pop "what a name" after the wrong moniker? Anyhow, my 21-year -old daughter is terribly keen that house prices crash sometime in the next 5 years or so. What can I do to help bring it about?
Posted by: dearieme | January 13, 2007 at 12:51 AM