HOUSING DATA AND GREAT BRITAIN

As discussed earlier, housing provides a strong indicator regarding interest rates
throughout the world. For example, as 2006 ended, the situation in Great Britain regarding
housing indicated a very strong housing market and therefore supported sentiment
of interest rate increases by the Bank of England. In 2006, housing prices inflated
by nearly 10 percent in Great Britain. Economist Diana Choyleva believed prices
could rise by as much as 15 percent in 2007. But she warned that if the Bank of England
did not prevent people’s taking on excessive debt by raising interest rates, it risked
laying the foundations of another major collapse. In January 2007, she said, “The Bank
could risk finally spawning a house price bubble in 2008” (Edmund Conway, economics
editor, “House Prices at Their Most Overvalued for 15 Years,” Telegraph, January 2,
2007).
In other words, expectations of an interest rate cut in Britain would require evidence
of a slowdown in housing price increases. The trader trading the British pound should
watch British housing data very carefully and gain an edge in shaping trading strategy. A
useful web site for staying on top of British housing data is www.hometrack.co.uk/.


By ABE COFNAS