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Housing's bubble trouble

Individual windfalls may be cause for individual celebration (and glasses of bubbly), but our Britain’s still housing bubble must still be popped

At first glance, it would seem that our ailing housing market is on the mend. Taylor Wimpey, a major housebuilder, has noted the first “measurable improvement” since 2008, and Halifax, the giant mortgage lender, says prices are rising at their fastest rate for three years.

Sighs of relief (and glasses of bubbly) all round, then? Sadly not. The individual windfalls from Britain’s still unpopped housing bubble may be a staple dinner-party topic across the land. But our addiction to overheated property prices must nonetheless be broken.

It is true that the national picture has been skewed by the extraordinary situation in London, where prices have risen inexorably thanks to international wealth pulled in by the capital’s status as global playground, safe haven and sound investment. Leaving the averages aside, there are swathes of the country where property values stalled, and even fell, in the aftermath of the financial crisis.

But the scale of the correction has not been consonant with the bubble that preceded it. Nor has the consumer-debt overhang been fully addressed. And although any surge in confidence behind the latest burst of activity is not to be sniffed at, George Osborne’s cheap-mortgage offer in his March Budget is also key.

Economists baulked at the scheme from the first, unconvinced by growth based, yet again, on debt. Even Sir Mervyn King warned, before stepping down as Governor of the Bank of England, that the Chancellor risked saddling the taxpayer with another slew of bad loans. Meanwhile, the generational gap between old-rich and young-poor only widens. Mr Osborne’s election-focused giveaway was canny politics but atrocious economics. Signs that it is working is cause for concern, not celebration.