Tale of two markets
[Re: Will the Bank of England’s new powers to tame the housing market be effective? yesterday]
The UK is two distinct property markets. Outside London is domestically driven, so domestic policy matters to property prices. The ratio of average house prices to average incomes will track average mortgage to income ratios over time. If the multiple of income that can be borrowed is limited, the ability to pay more for a house is constrained. This is a reason why there is no property bubble outside the capital. London is internationally driven: domestic policy matters less. But news that British policy makers are targeting the housing market may deter international investors from speculating on London property (even if they are not directly affected by the policy). The effectiveness of the signal may depend on how much the government message is blurred by the distortion of Help to Buy.
Paul Donovan, global economist, UBS
[Re: Britain’s energy security is under threat: It’s time to frack, Friday]
Many have been warning about the destruction of Britain’s energy industry by politicians. We’re on the road to disaster, closing down good power stations and wasting billions on wind turbines.
BEST OF TWITTER
It’s a very Anglocentric thing to assume that caliphate jihad is the stepchild of Tony Blair’s folly.
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Another example of institutionalised inflation as the London congestion charge rises by £1.50 to £11.50