Any Physics scholar will tell you, that nothing on Earth can defy gravity forever. Gravity always wins, Sir Isaac decreed this over 300 years ago. 

The exception, or so it would appear, are UK House Prices! 

Despite a global pandemic, causing a most profound economic shock with at one point almost a quarter of the UK workforce on furlough, our housing market and pricing continued its relentless upward march. The million-dollar question is whether this upward march can continue or whether gravity’s claws will start to bite.

House Price inflation is not a uniquely British thing, many developed economies are experiencing similar housing booms. This is probably not to be unexpected as most governments are following a similar path of fiscal stimulus, the UK QE programme is now approaching a trillion pounds.

With the final Stamp Duty holiday finishing 30th September there is likely to be a greater degree of realism enter the market. Furthermore with rising inflation and talks of potential interest rate rises the downside risks are increasing.

It is probably too early to “ring the bell for the top of the market” but caution must now be the watchword. Otherwise, we may need more than an apple to keep the economic doctor away!      

Stuart Parfitt, Managing Director, BLG Development Finance 

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