15
Apr
BBC Radio 4 Interview
It was extremely interesting to listen to a BBC Radio 4 interview.
The interviewer being Mr Evan Davis, the interviewee, the
Halifax's, own chief economist Mr Martin Ellis. This was the first
interview of which I have heard where someone has, very eloquently,
put into perspective what is actually occurring in the market place
today. Mr Ellis did bring to our attention that over the last six
months in real terms property values have only fallen by average,
across the nation, 1%. Not that anyone I know knows the true value
of their property to that single digit accuracy. He was also very
careful to point out that in the West Midlands and West Wales in
particular declines over that period represented as much as 6%. He
then qualified that by saying that in certain parts of the UK
values had continued to rise. He sited Greater London as an
example. I believe it to be common knowledge that areas such as
Surrey, Hampshire and West Sussex also continue to share that good
fortune. When pressed by Evan Davis, who in his usual negative
journalist fashion, was digging for misery, his spade made very
little impact when trying to dig a hole into which Mr Ellis could
fall. In fact for a chief economist or any economist for that
matter, his defence was very robust. Davis predicting a repeat of
the 1990’s experience, Ellis on the other hand expressed
quite the contrary. the drivers behind the market are entirely
different now. The success of the UK property market is driven by
the labour markets which seems not to have suffered at all at the
fate of this economic cycle. In tandem with this we also have very
low inflation, low, and declining interest rates and a stock market
that over the last few weeks has reflected only modest change but
still culminating in s slightly upward direction. The final
contributing factor introduced by Mr Ellis pointed out that once
again there remains an acute shortage of new homes. He was
therefore suggesting that demand remains greater than supply and
that alone is a basis for supporting the economics of our UK
housing market. Mr Ellis continued with his more optimistic
approach by saying that whilst the Halifax had revised their
financial forecasts this year. Instead of a static position he felt
there could be a relatively small decline in values. Once again
indicating that this of course is an average and does not
illustrate regional variations, highs and lows. I retained a copy
of an article which appeared in The Daily Telegraph by Edmund
Conway, dated Wednesday 6th February 2008. He reminded us that the
Cities crystal ball gazers, this band of jolly economists, had a
reputation more for being wrong far more frequently than they had
for being right. Good old Edmund pointed out that in January 2007
'all but one of there number (economists) failed to predict the
quarter point increase in interest rates.' He goes on to say 'then,
in December, the majority did not foresee the banks first interest
rate cut in years despite the fact that – horrors of horrors
– the money markets had be pricing in a cut for sometime'. In
the same report he was keen to challenge the foresight of these 'so
called experts' by demanding to know why, twice, they had been
completely wrong. The reason I mention this is because of those who
follow my mutterings in this column will be very well aware of my
great scepticism of the reliability of these expert analysts. They
seem to be expert in giving one side of a two sided argument which
made it even more compelling listening when Mr Martin Ellis spoke
to Evan Davis today. He gave one of those very rare interviews
which put into perspective the content that is very often concealed
somewhere under a 'shock and awe' headline. As I drive around the
streets and villages of central southern Hampshire and visit my
offices I am meeting more and more people who no longer rely upon
forecasts and predictions and increasingly use their own instincts.
Seemingly they have an appetite to continue buying and selling
property.