Belfast Telegraph

Thursday 21 August 2014

Don't burst that bubble

Margaret Canning, Belfast Telegraph business journalist
Margaret Canning, Belfast Telegraph business journalist

Economic deja-vu is a peculiar phenomenon. On a micro-economic level, it's the feeling, yet again, of being skint before pay-day. Or the feeling of being flush with cash after pay-day.

And the latest widespread sense of deja-vu in the economy is the sinking feeling that another housing bubble is inflating in Britain.

Another series of reports points to property prices soaring again. Halifax said house prices jumped 8.5% over the year to April and now stand at an average of around £177,640.

The Royal Institution of Chartered Surveyors (RICS) in Britain has said that house sales are now at their strongest in six years – and that the slightly worrisome trend will continue as the market is still afflicted by weak supply and high demand.

We've experienced our own crazy prices in Northern Ireland and a gradual recovery is taking hold. The Northern Ireland RICS survey reported its members have been telling them that prices have been going up for 11 months in a row, and 64% of respondents said prices were up in April.

And only two UK regions – East Anglia, and, unsurprisingly, the economic engine room of south east England – had more surveyors than in Northern Ireland indicating that prices were going up.

On the balance of probabilities, we will not face the same property boom we had up to 2007, when rapid price growth surpassed most of the rest of Britain. The price inflation here was out of proportion – though something on a similar scale could soon face our cousins in other parts of Britain if action to cool things down is not taken.

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