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A little over a week ago, the champagne corks were popping in all but the most sceptical corners of the UK property market. News that average house prices have risen for 6 months in a row was always likely to do that.
The exact figures vary slightly, as they always do, but the consensus was a year-on-year rise to the end of October of somewhere between 1.5 and 3%. The UK media was quick to jump on the bandwagon with excited talk of 'prices on the up', 'pent up demand outstripping supply', 'rosy days ahead', etc, etc.
Hogwash and nonsense of course, but so desperate is this nation of homeowners to hear that the nasty old price crash is over at last (just 15% down from the July 2007 peak – halfway there at best) and that business as usual is just around the corner, it's easy to understand why newspaper editors pander so easily to their delusional optimism.
It reminds me of that famous final scene from Blackadder when the soldiers are poised to stream from the trenches to certain death; suddenly the bombing stops and a rare silence prevails. “It's over at last!” cries one eager soldier, unaware that the bombing always stops temporarily just before a major advance. “The Great War,” he opines. “1914 to 1917!”
Okay, the UK property market may not be facing metaphorical annihilation, but it is in for at least another 15% price correction from the giddy highs of '07. And property markets, unlike their 'easy- in-easy-out' stock-market cousins, tend to take their time with corrections of this magnitude. I really don't see 'average' growth returning for at least another year, possibly two.
Which doesn't mean investors, foreign or domestic, have to wait that long to take advantage of the current low prices and borrowing rates. They just have to make sure they ignore these short term rallies (of which there are bound to be several with so many people willing them to happen) and recognise them for what they are: dead cat bounces. Or, to be fair, sleeping cat bounces.
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