26 Sep 2013

Nationwide figures likely to fuel bubble fears

Insights, Property, Publications

The Nationwide’s latest house price index, due out later this week, is expected to show that house prices have risen by 4.5% in the past year.

The Sunday Times says the figures will renew fears that government initiatives to boost the housing market are pumping up prices.

However, Moody’s Analytics’ Melanie Bowler tells the paper that the chance of a “bubble” occurring are remote. “Some worry that Help to Buy will generate a property bubble, but this seems quite premature.

Outside London, house prices remain well below their peak and are unlikely to regain it until 2018,” she comments. Ms Bowler’s view is not shared by Rob Wood, an economist at Berenberg Bank.

He tells the Sunday Telegraph that the Help to Buy scheme is unnecessary and adds that it could create “the conditions for the next bust”.

While Societe Generale’s Albert Edwards is more downbeat. He describes the scheme as “moronic” and warns that the market is already in the midst of a bubble and that a bust is “inevitable”.

Sources: The Sunday Times, The Independent on Sunday, The Sunday Telegraph

We say: ‘Bubble fears’ – is anyone else thinking of Rover, the giant white guard-sphere from cult 1960s TV series The Prisoner? This is, after all, Month Number Six of our financial year. I sympathise with anyone who regards relating to the Nationwide figures as a stifling prospect. Because I am not a number.