In July 2007 we said in these pages that cheap credit had been driving up house prices. The credit bubble continued to inflate for a little while longer only to start leaking after Northern Rock and then burst with a bang upon the demise of Lehman Brothers. Since then the Bank of England has slashed base rate and pumped billions of pounds into the economy. This has put a prop under the housing market and according to our London centric media the party has started again with prices surging in the Capital. Unfortunately, it seems some people are once again turning a deaf ear to the fundamentals and at the same time building up false expectations. Lets look at the following stats for Wolverhampton courtesy of The Land Registry:

Month/yr Ave price Volume of sales
05/06 £116k 309
05/07 £121k 302
05/08 £127k 216
05/09 £105k 119

The figures for May 2010 have yet to be released but as you can see the big problem is volume. Of course if you’re truly hard of hearing you can try turning this up. For house prices this would mean the Banks making more cheap money available to borrowers.. …….an unlikely prospect you may think.