I am always alarmed by the assumption “rising house prices = good” and “falling house prices = bad”. It should have become apparent by now that house prices are effectively a different currency from everything else – exposed to different fluctuations and often inclined to drift well out of proportion with the real world.
Two key points that are too often missed in media commentary:
– house prices in the UK are now two and a half times higher (comparative to everything else in the economy) than they were in 1975 – whereas in Germany, they are lower!
– house prices even in Northern Ireland remain at over five times the average salary – in still uncertain economic times, that remains some risk!
So yes, I personally have a mortgage and so do most of the people writing about this – hence an inherent bias towards rising house prices in the media. But I’ve spoken about this middle-class media bias before – many people do not have a mortgage and, among those, some wouldn’t mind one. They have no chance if house prices drift to many, many multiples if salary. We certainly should not assume that rising house prices are in our economic interests – they weren’t in 2007, and they may not be now.