Top O’ The Bubble To You, England!

Felix Salmon found it quite odd, after weighing the roles of sellers holding out for peak prices and weird index (average) behavior, that the house price index for England and Wales managed to register a small increase — though considerably less than measured inflation — despite a dramatic collapse in sales volume.

England probably does enjoy more than the usual weird average behavior, thanks to the relative size of London. House price appreciation also happens to have pretty much come to an end essentially everywhere else:


The fun thing is to compare the U.S. Here’s Calculated Risk‘s picture of U.S. existing home sales, seasonally adjusted and annualized. Here’s a picture Charles Calomiris posted at Vox EU back in November under a subhead “Reasons to be cheerful.” (!!1!) If you don’t want to click the links, the story is that the peak of existing home sales was in mid-2005, whereas the Case-Shiller indexes peaked a year later. And as of Calomiris’s writing, the OFHEO index was still at a point where Calomiris could write…

At the moment, it is not obvious that housing or other asset prices are collapsing, or that leverage is unsustainably large for most firms or consumers.

…and it arguably was a matter of geek warfare to point out that he was whistling in the graveyard. Heh, well, crazy as things got here, the English bubble has on its face been a lot worse. The average detached house in England and Wales is £275,000. Sure, the mean is not robust, but still, that’s pounds! To the extent the Fed is in a bind, things should be really fun these days over at the Bank of England.