Getting the facts

In a week of lies, cheating and falsehoods (Chris Huhne, Australian sport, and Findus lasagna) one could be forgiven for questioning the veracity of just about everything we’re told these days. I’m just as confused, and increasingly skeptical, though, about what I hear regarding the true state of the economy and the all-important property sector.

A few days ago, I overheard a well-known and respected property person express the view that the London market ‘has peaked’. He, or she, wasn’t predicting a collapse, but assessed prices to be flattening and even falling, even in the hitherto bullet-proof prime sector. From somebody as close to the action as it’s possible to be, I thought it an opinion of worth taking note.
 
Lo and behold, come Sunday I open my papers to read: ‘House prices to rise 30 per cent in London by 2020’. This insight comes courtesy of the Centre for Economics and Business Research (CEBR), and asserts that the average price of a London residential property will ‘surge past’ £500,000 by the end of the decade. That’s just eight years away.
 
The CEBR attributes this performance to London’s ‘rosy economic growth prospects’ and the capital’s relatively ‘low reliance on the public sector for jobs.’ But it’s less good news for northeast England and Northern Ireland where prices are predicted to grow by a miserly 2.35 per cent and 6 per cent respectively.
 
Elsewhere, we have become accustomed to doom-and-gloom stories regarding government cuts and the need to shrink the state in favour of the individual and private enterprise. Again, however, the facts appear to contradict the rhetoric.
 
Take welfare; under current Treasury plans, the welfare budget will rise from 28.5 per cent of total government spending in 2010 to over 32 per cent by 2017-18. Take note: this country (or more properly its taxpayers) will be devoting nearly one-third of its national income to welfare in just a few years. Don’t take my word for it; take that of the Institute for Fiscal Studies (IFS), a ferociously non-partisan forecasting house.
 
Similarly, the IFS has torn into the myth of ‘swingeing’ cuts by exposing that real-term budget reductions in non-ring-fenced ministries (Health, Overseas Development and Energy & Climate Change…!) have barely begun  - just over 20 per cent of them, in fact. Ominously, the IFS predicts this failure to tackle decisively the thorny problem of state spending will lead inevitably to tax rises once the 2015 General Election has been fought.
 
So, who to believe? Frankly, I don’t know. What I do know is that the man on the ground is usually in the best position to judge what is real and what is not. Bridging is a perfect example. Some of the more disingenuous mainstream banks and lenders may insist they’re lending more and on looser terms; but among the real alternative providers, we see this for the spin and fluff it is. Moreover, so do our brokers and their clients.
 
So, people, let the facts speak for themselves…