Tag Archives: UK property prices

If it’s a boom period, why are we not feeling any richer?

As a financial journalist, assessment of where we are in the economic cycle is inevitable in most conversations I have through work.

Recently, industry professionals have casually thrown in statements such as “we’re due another recession” and “they’ve only been through a boom period” when talking about new businesses.

When people talk about this year’s global market turmoil slowing down the UK’s recovery, it evokes images of some sort of financial Mardi Gras that we’ve all been enjoying, soon to be curtailed by drama in the commodities market and political crises in Russia and the Middle East.

While I accept that the statistics support these assertions, it somehow jars from a personal finance perspective.

It comes down to two things: wage growth and property prices. Growth of pay packets slowed to 1.9 per cent in December, down from a high of 3.3 per cent last summer.

Property prices are ballooning in London and rising fast in other parts of the country, namely due to a supply shortage and population growth. Average UK prices hit a 10-month high in February, according to Nationwide.

Yes, interest rates are likely to remain low due to the imminent threat of a China-led global economic meltdown, but what use is a low borrowing rate if you can’t afford to save for a deposit or pay off a mortgage in the first place? Add into the mix the tightening of the credit market and it would be easy to see how one would miss the fact that we’re allegedly in a boom period.

The threat of a continued commodities rout, geo-political woes in the Middle East and China’s economic slowdown may be keeping George, Mark and the rest of the financial elite awake at night, but for the rest of us, it’s business as usual.