Those who know me will be aware that I am currently trying to move home. In fact I have been trying to move home for some considerable time. The fact is that since putting my house on the market much seems to have conspired against me but the real problem is the economy.
It is obvious that the economy is in a fluctuating state and is tippling on the edge of chaos - much of it because of the appalling way the economy has been handled in the past year, let alone the past ten years.
But my house is an interesting story as it tells you a story about an economy being based on the very personal aspect of ’sentiment’. Economics is much about facts, statistics and projections, but my house seems to tell a story of an economy governed by the more personal mood of those who make the economy go round; people.
Put frankly people are feeling poorer and nervous. The fact that the average family is spending more (£1,300 more) then it was a year ago is bound to cause pressure as families either face up to trying to maximise their income or making cut backs in their spending - not an easy task when you have children!
But what about the nervousness? Well, house prices where I live are in a very strange position. There are obviously not many people out buying as they try to batten down the hatches in case the economy goes into freefall. Equally, and perhaps oddly in a supposedly falling market with few transactions, there has not been the expected flood of houses onto the market. Demand might not be soaring but then neither is supply; as a consequence prices are not falling in the manner you would expect in a period of over supply. So, is this a sign of nervousness, where buyers and sellers, in equal measure are too nervous to commit? This is a stagnant economy, and whilst the Government might well tout the view that we are all OK in the long-run, my fear is that in the long-run a stagnant economy can very easily tip into a recession. Is the Government doing anything about this?
Well, in housing terms ,which is clearly the largest asset of many of us, they are not. The Bank of England, rightly, has inflation as its target and whilst the economy slows, and the risk of rising inflation increases their minds will probably be set on increasing interest rates not letting them come down - bringing them down ‘might’ act as a stimulus package for the economy. I have never been sure as to whether their concern must be the wider economy or merely the target they are set by Government.
So for now, buyers and sellers, me included, are stuck in a stand-off and none of us really know when the tide might turn.
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