Rather muddled logic by Aditya Chakrabortty in this Guardian article: http://www.theguardian.com/commentisfree/2014/may/30/britain-feasting-on-credit-crunch-hit-2016
The only reason for interest rates to go up is to curb inflation (too much money chasing too few goods).
As everyone knows, average inflation is not going up (with the exception of house prices).
Looking at house prices specifically, on average they double every seven years (and have done so since the Second World War with blips and dips along the way but still keeping to the seven year average upward curve). We are still below that curve in terms of house price increases. Therefore there are several more years to go before we enter a "blip" of house price exuberance.
On the issue of the long-term affordability of housing, I think there needs to be more discussion of the "legacy factors" of older generations dying and leaving property to their children. Let us assume that an elderly widow, owning a small house in a London suburb, dies. Her house is worth, after taxes and paying off any borrowings against the property, £300,000 which is then split between her six grand-children. These six people aged in their early to mid thirties now have £50k each to act as a deposit on a property of their own. Thus mortgages become obtainable and the new level of prices we have seen become sustainable. Someone needs to write a research paper on the legacy effect on house prices - people are dying all the time and pouring money back into their families.
The only reason for interest rates to go up is to curb inflation (too much money chasing too few goods).
As everyone knows, average inflation is not going up (with the exception of house prices).
Looking at house prices specifically, on average they double every seven years (and have done so since the Second World War with blips and dips along the way but still keeping to the seven year average upward curve). We are still below that curve in terms of house price increases. Therefore there are several more years to go before we enter a "blip" of house price exuberance.
On the issue of the long-term affordability of housing, I think there needs to be more discussion of the "legacy factors" of older generations dying and leaving property to their children. Let us assume that an elderly widow, owning a small house in a London suburb, dies. Her house is worth, after taxes and paying off any borrowings against the property, £300,000 which is then split between her six grand-children. These six people aged in their early to mid thirties now have £50k each to act as a deposit on a property of their own. Thus mortgages become obtainable and the new level of prices we have seen become sustainable. Someone needs to write a research paper on the legacy effect on house prices - people are dying all the time and pouring money back into their families.
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