The housing boom’s over but it’s not all doom and gloom

Buyers and sellers alike are waiting to see what damage will occur

- HAMISH MCRAE

House prices in Britain in October fell for the first time since July last year, and are now up only 7.2 per cent year-on-year on Nationwide's index. The news sent a chill through the market, for house prices are a lagging indicator of what is actually happening.

The turmoil of the past few weeks has meant not only that mortgage rates have shot up, but many offers have been withdrawn. Sales have collapsed and buyers and sellers alike are waiting to see what happens next. The boom has clearly ended but will now be a crash, a plateau, or what? There was another piece of news yesterday that gives us some clues. It was the clutch of stories about the toughness of the autumn statement to come on 17 November. This newspaper's take was that the NHS would be prioritised but there would be tax rises for millions of households and a cut in spending on other areas.

The connection? Well, there were two reasons for trying to get this story out into the public domain. One was the standard one of news management. If you are going to do something that clobbers peoples' budgets, you leak the bad news well ahead of the event, so that when it happens you can row back a bit and present something that is less serious than people have been led to expect.