On the front page of the Telegraph is a piece focusing on St Vince of Cable’s warning that the housing market is exhibiting all the signs of overheating and that Mark Carney is considering stepping in on the lending side. He fears we’ll repeat the mistakes of the benighted Brown. The story takes the usual form – there are references to the danger that the market ‘may be heading for a bubble’, never the suggestion that there’s already a problem. There is no real appreciation of the lags associated with these types of macro-relationships. The market has already been given a big push, which hasn’t worked its way through the system yet. And nor, of course, is there a discussion of the difference between a boom and a bubble.
In my view Vince is right to be worried, but I don’t suppose it will have much effect. Yet by the time it becomes hard to dispute a boom is in progress it’s already way too late to act.
Over in Graunland private renting is described as the “social scandal that is being ignored”. And there is a piece about our old friend Mr Fergus Wilson, Britain’s biggest buy-to-let landlord. It reports that Mr Wilson has decided to evict the 200 of his 1000 tenants who receive housing benefit. The argument here is that rents are increasing while benefits are being eroded. Benefit-dependent households are therefore more likely to be in arrears, even before the arrival of Universal Credit. Mr Wilson considers he’d be better off reletting the properties to Eastern European migrants because they are more reliable. [Read more...]