The state of the nation

Whilst the national housing market bears little relationship to London Central, recent growth should be put in perspective.

Between 1996 and 2005, prices increased by two and a half times, an annual average of 12%. This is greater than the 20 year trend of 9%. A number of exceptional factors have contributed to this.

Following the 1989 "boom", there was a downward price correction. Subsequent price rises reflected "catch-up time" as well as inherent growth. Until recent rises, the bank base rate has been at an almost all-time low. Employment is at the highest level for nearly 30 years.

We projected some while ago that the growth cycle in the national housing market had probably reached its current peak. This is borne out by the recorded growth rate returning to trend in England & Wales at 7.5% in 2007. Nevertheless, the ingredients for future growth still exist.

There is a shortage of domestic stock. Between 2001 and 2011, the population is likely to increase by 2 million. The owner occupation rate in the UK is high at 70%. When analysts talk about another boom/bust cycle, it is likely that this market will see no more than a soft landing and take off again when domestic economic factors stimulate another growth surge.