I was listening to Radio 2 the other week, something I am now willing to admit to, and their financial journalist Martin Shankleman was talking about the housing situation.
The quote used from The Bank of England was “that it expected growth (in house prices) to slow to zero in the next two years”. There would then be a levelling out and prices would stagnate for quite some time, without even a rise in line with inflation. This was seen as doom and gloom, and trouble on the way. This is the type of message going out to the public, again another media method of talking down the economy, which is partly why we end up in a recession. Why do they do it?
In fact, this should be seen as a positive. We currently have a strong economy. If nothing alters, all the factors are still there to maintain a strong economy. Too much more inflation in house prices could upset this balance and increase interest rates. A levelling out will address some of the excessive increases we have seen and help keep interest rates low.
Don’t get me wrong, we all like to see our house prices rise; but when, if ever, do we see the cash? If we move, the next house just costs more. The BBC also stated “Many surveys have identified the lack of first-time buyers as the reason for the slowdown in prices. House prices have reached such a level that it is becoming increasingly difficult for first-time buyers to get onto the property ladder.”
So the fact that houses will not keep up with inflation, and interest levels will remain low, will make the starter home more affordable, therefore allowing more people into the housing market. More people wanting more new houses means more timber related products sold. Sounds good to me.
If you are in the timber trade, being selfish should not really extend to wanting to see an increase in the value of your own house, rather we should want a reduction. Try and get that message across. There is always a positive, which can far outweigh any negative. It is all a state of mind!
