View from City Road: A trap for the unwary

If the Government really wishes to minimise the danger of another bout of destabilising inflation in the housing market it must hold interest rates at their current levels.

Prices are lower compared with earnings than for two decades. People can afford to pay more, and do when they feel the market is on the mend.

That sets a trap. Stagnant prices may seem to help keep inflation under control. But the longer recovery is delayed, the more affordable property becomes.

Some rebound is inevitable. But the market is like a rubber ball; the harder it is pushed down, the higher it will bounce back.