It’s been a while since I blogged. With two family members in hospital and a pregnant wife, it’s just been a little hard to give a toss about banking. However prompted by news that our lease can’t be extended, landlord went bankrupt and I assume the receivers want to try to sell it, I have regained some interest in the Property market. As I posted about previously, I like renting and being completely debt free, yes I don’t reap the rewards of property price inflation but conversely, I haven’t seen my personal finance completely implode with property price crashes around the world in the last few years. I suppose my careful approach reveal my continental working class background.

But anyway, being a retail banking expert of sorts and now homeless, I must care a bit about property prices. I guess if we were looking at a recovery in house prices one should consider buying something. Many analysts and several of my colleagues are indeed expecting a recovery, citing 'pent up demand' as the key reason. Their predictions are based on the fact that a lot of people haven’t been able to get on the housing ladder, mainly because of strict lending criteria. So the argument goes that when lenders start relaxing their lending criteria, more people will be in a position to buy and therefore prices will increase, it seemingly doesn’t matter that these people will be stretched beyond the maximum they can afford to repay, where there is a will there is a way, is the argument.

My view is this. We might see another short period of house price inflation followed by a long period of deflation. When government finally abandon the idea that increasing house prices are in some way good for the economy and give up subsidising it in every way possible, when Bank of England starts to increase the interest rate, and when the small private property investors (and by that I mean people with little or no knowledge of macro economics or property) start to realise that bricks and mortar are no longer a sure thing. I could be wrong, of course, but for me continuing to rent seem by far the safer option.