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  • Back to earth with housing . . .

    February 22nd, 2011

    As the first UK-based think tank with a space programme, last week’s event we organised on the UK Space Economy created quite a buzz, more than a few tweets and some very interesting follow-on content about the Isle of Man’s burgeoning space services sector.  Thanks again to Jim Bennett for a superb talk.

    So if you can forgive the pun, please watch this space for more to come.

    In the meantime, housing – i.e. the price of it – is firmly back in the news again. House prices are a national obsession and so news that asking prices for homes in England and Wales jumped 3.1% over the past month made a big splash. Over the last few years, forecasts have been even more out of line with reality for housing than the big macro indicators – inflation, growth and unemployment. So what’s going to happen?

    The paradox of the housing market is that almost unlike any other commodity, when prices start to fall, supply contracts as sellers take their properties off the market and start to rent them out instead.

    The essential thing is to keep your eye on the big picture – here’s a chart that runs from 1985-2009

    According to Rightmove, today there are 1.3 million homes for sale, but just 530,000 mortgages were approved last year. I really don’t see that improving over the next couple of years. I fear we still have a long way to go until the banks return to full financial health. And we’ll almost certainly never experience a 10 year doubling of prices ever again.