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Compared with US we’re doing all right


There certainly is a fair bit of doom and gloom returning and plenty of talk about the dreaded double dip.

Whether it is real or imagined will become clear over the next few months but for what it is worth, while I think it will be rocky in 2010 the overall picture is not quite as bad as some would make out.

Take house prices, for example. We have seen some positive movement over the last six months which may or may not continue.

But looking back you can see that house prices, despite the worst recession for 70 odd years, had a peak to trough fall of 20%, have rebounded pretty quickly and now stand at around 10% less than at their peak.

I accept that this has partly been achieved by low interest rates which now look likely to stay low well into 2011 and possibly beyond, but there is also a structural undersupply of housing stock which is not going away soon.

Spare a thought for our cousins across the pond. Average house prices in the US are back at summer 2003 levels.

Las Vegas recorded a 21% decline in house prices over the last 12 months and 14 out of 20 cities in the S&P Case Shiller house price index went into negative territory in 2009.

In the US there are 11.3 million households in negative equity which is broadly the size of the entire UK mortgage market.

So it is not all doom and gloom, and in some respects we are doing relatively well.



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