Fallout from a bursting of London’s housing bubble would lap up to No 10

OUTLOOK: Cassandra was right about Troy all along. So I’ll make no apologies for carping unfashionably about the risk that we’re still getting too carried away with talk of the economic recovery.

As the Nationwide becomes the latest in a string of vested interests finally to concede we’re in an overheated housing market, and London’s Telford Homes talks of a four-year waiting list for its properties in London, it’s timely to look at the knock-on effects of a sudden end to the property bubble.

Negative equity, collapsing consumer confidence and a fall in retail sales of furniture, fridges and other expensive house-move items are the obvious hangover symptoms. But equally pernicious – and of wider political importance – is the direct impact on jobs.

According to the Office for National Statistics, no fewer than 136,000 more people are now employed in the construction sector than a year ago, before the Help to Buy and other bubble-inflating initiatives really started to bite. That makes it by far the biggest creator of jobs in the whole economy, accounting for one in every five posts created over that period.

The figures are even more pronounced if you drill down into the data covering solely our rising army of the self-employed. This shows that, of the 136,000 new construction jobs, 83,000 were working for themselves. Another way of looking at that is that one in four self-employed jobs created since early 2013 were in construction. And these are only the legit building hires that go through the government statisticians.

Construction work is predominantly done by men, but the percentage increases in new employment since the property boom are even more pronounced when it comes to women in associated property jobs – estate agents and the like – where 34,000 more women, up 20 per cent, are now employed in the sector than a year ago.

What can we conclude from all this? Only one thing – a bursting of the property bubble would be a disaster for employment. And, given the high number of self-employed on building sites who can be sacked at the drop of a hard hat, that jobs crisis could be rapid. Fast enough to cause further dissatisfaction among working-class voters before next May.

Something for the Chancellor, and the Bank of England, to chew over before dismantling Help to Buy, pushing up interest rates or clamping down on mortgage lending.

London, where the bubble is biggest and most fragile, might not be so resilient to Nigel Farage’s charms after all.