WIREDGOV

Blog posted by: James Meadway (November 6, 2013)

Are we entering a new bubble? Warnings have been sounded over the last few months that the UK’s long-delayed recovery contains the dangerous early signs of a fresh speculative explosion. House prices in London shot up by 10% over the last month, with over a third of sales paid for in full with cash – an indication that hot money is flooding into the market.

But should we be worried? One quick and easy way to check is in the ratio between what people earn, and what they are expected to pay for a home. If this ratio is rising rapidly, it means houses are likely to become increasingly unaffordable, especially for first-time buyers.

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