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Even the Chancellor agrees with our view on the UK housing market and house prices

7th February 2008 | back to article listings BACK    print this article PRINT

The government is seriously considering changing how the mortgage markets are financed in the UK to smooth out the effects of any financial sector turmoil in any future crises.

Alistair Darling said yesterday that the Treasury was considering creating “a ‘gold standard’ for covered bonds and mortgage backed securities”, which they hope would “help not just the housing market but wider economic growth in these uncertain times”.

Alistair Darling also clearly agrees with our view that the prophets of doom in the housing market are full of hot air and severely lack any due consideration of the facts. In a close mirror of our previous analysis before Christmas on the truth about the property market he said “Interest rates remain at comparatively low levels, as do mortgage rates”...“And unemployment is currently at 30-year lows. What’s more there are important differences between the housing market in the US and the housing market here."

“While many US mortgages were sold at hugely discounted rates leaving people unable to meet repayments when rates increased, lenders in the UK have been more responsible in taking account of an individual’s ability to pay. And demand for housing outstrips supply”.

His comments very closely match our views issued in December http://investors.assetz.co.uk/blog/?postid=54 and it's clear that with numerous other commentators and property investment firms in the sector using remarkably similar words to our case for the housing market being stable this isn't just a case of people copying our article (although this is flattering when it happens), more a case of people considering the facts versus the hype and nearly all coming to the same conclusion.

The UK residential market has barely wobbled in the last six months whilst the prime commercial market has collapsed temporarily, as has the stock market. It's the fundamentals supporting the residential market that has made it so stable and it's those same fundamentals that will continue to drive house price growth, albeit more limited growth in the short term, for years to come.

Stuart Law

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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