There is a fundamental problem with the economy of the United Kingdom when the increase in house prices is seen as a major and more worryingly a good economic indicator.
The recent information is that house prices in England have risen to a four year high with the average cost of a house now being over £240,000.
With historically low interest rates of 0.1% there is no doubt whatsoever that sometime in the future the interest rates will rise which will almost certainly mean that many of those who are buying their homes at the low – some might say artificially low – interest rates will have to pay increase mortgage payments.
The impact long-term will be that house prices will fall and for those of us who remember the housing crash of the late 80’s early 90’s the ramifications for the economy are very serious.
There is also a broader problem which is that housing and more importantly a home is like food, fuel and essential utilities a necessity.
OK there are some who also believe an IPad and IPhone are a necessity but I’ll leave that for the time being.
The rise in house prices results in a necessity of life, that of having a roof over your head, becomes less affordable to buy for many.
Rents follow house prices as certain as day follows night so those who are on lower incomes will continue to suffer for the very simple economic reason that having a home will consume almost all of their income or even worse find themselves homeless.
Anyone in their right mind who thinks this is a good thing is crackers.
And yet people for some reason still believe rising house prices is a good thing which is remarkable when you think that they object to rising prices of water, gas, electricity, food, fuel and clothing.