We can’t, at least not in the short term. You have to look at both sides, the supply and demand. On the supply side, the objections to planning permission for new housing in this country are still very high. The number of houses you’d have to build to disrupt the demand is so large it would be a decade-long project, and one that would always be racing away from you. On the demand side, you have to tackle the argument about immigration, reducing the number of people coming into the country; if you’ve got 350,000 people coming in every year, then that’s a reasonably sized town every year. I don’t see how you solve that very quickly.
I’m not saying that the housing market won’t have its moments of pause but is it going to crash? No – not even in London, not in the near term. And it’s especially unlikely with a weak pound as well. The number of foreign holders of property in London is legion. We make it extremely easy for them to buy property in new developments off plan, from computer simulations, and never inhabit it.
In the meantime, if you want to jump on the property merry-go-round you have to borrow right up to whatever your current cashflow allows you, if the banks will lend to you. The only positive note is that, although the banking model has moved so that they’re trying to get more out of people for services rather than lending, there is still money to be lent.
Stewart Cowley is the author of Man Vs. Money: Understanding The Curious Economics That Power Our World.