I attended a briefing this morning organised by the Sunday Times and which featured as its speakers, the great and the good of the authoritative weekly.
Star of the show, for me, was David Smith, their Economics Editor for the last 25 years. This is particularly fitting given that the Sunday Times business section is celebrating its 50th birthday this year.
Following speeches by Smith and colleagues from the Business and Money sections, a Q and A teased out a pretty compelling statement from the economics stalwart when put on the spot on the housing market.
‘Are we in a housing bubble and if we are, what should be done about it?’ asked an inquisitive PR from the packed audience.
‘Talk of a housing bubble is wide of the mark’, came the swift and unequivocal retort from Smith.
Explaining his view, Smith highlighted the differing markets at play and went as far as to compare the UK in general to the distortion of ‘Kensington or Chelsea’ the latter of which may well be in a bubble, he conceded. But outside of the current London mayhem, nowhere else is.
And he’s right. I have often written that London is a market all by itself and that it cannot and should not be compared to Nottingham, Leeds, Norwich, Southampton, Newcastle or Middlesborough. Least not Fife or Durham. Or Swansea. etc
The UK housing market needs to be seen in the round. Not just as per an SW postcode. Yes, there is an issue in the capital overheating as such. But to slam the brakes on due to the concerns of one macro factor, as Smith predicts WILL happen early next year with an interest rate rise, would be a grave error for the rest of the country and its economic recovery.
Politics will have a huge part to play in this too given that albeit the Bank of England has independence, Numbers 10 and 11 Downing Street will no doubt be hinting quite strongly that they would not wish to see a potentially doom laden rate hike until the sun has set on polling day 2015.
And then it may well be someone else’s issue to address in any case.
Ian Cowie, Money columnist, went as far as to say this: ‘I favour leaving such things to natural market forces. It will work itself out’.
I tend to agree.
Russell Quirk is Founder and CEO of Emoov.co.uk