James Coney  

Pension tax changes are unlikely

James Coney

James Coney

But the current figures showing record rises in prices are a little misleading. Anyone who knows the current state of the mortgage market knows that this is a blip, where pent-up demand is rushing through, like water released from a dam.

When it goes we will be left with a drought. First-time buyers are being squeezed out amid fears that prices will crash while some banks have modelled falls of between 7 per cent and 15 per cent. They need bigger deposits and they are being hampered by onerous rules that stop them from borrowing as they once would.

This is unsustainable. It does not matter how many housing support schemes you put in place, or what offers house builders can launch. If young buyers cannot get a loan and the deposit for a mortgage goes further over the horizon every month, then eventually something in the housing market will stall.

The asset-rich cannot keep on buying second homes forever.

When all government support ends, the true position of the economy will reveal itself.

Then we will see who is really left buying a house.

Prepare for a pop

What to make of the US tech rally and the two-day sell-off?

Figures from the Financial Times suggest that 530 of America’s 8,513 listed companies (or 6.2 per cent) trade at more than 10 times sales.

Only at the very top of the dotcom bubble can you see a larger percentage of stocks, at 6.6 per cent. 

You can make your case that these inflated asset prices are all thanks to lower interest rates, which look set to stay, but to me it still looks like a bubble. And what we know about bubbles is that they do not tend to just shrink away painlessly – they pop.

James Coney is money editor of The Times and The Sunday Times