Property stops funding the economy

Number out today from the Bank of England confirm that what was once a major contributor to the economy has shut down. Home owners are no longer taking equity out of the properties and spending it elsewhere – on white goods, new cars or down the High Street.

As I explain to BBC News in Q4 of 2003 home owners took out nearly £18 billions. In the summer of 2008 as the credit crunch took hold the balance turned negative as people tried to pay down their debt.

Today, with house prices in some places falling, with interest rates low and with a Government that is frightening us with predictions of worse to come int’s no wonder that the net balance is -£3.2bn.

Property was the engine of the economy and this monthly report is often overlooked as it isn’t easy to grasp what it means but this is where the housing market and the wider economy link together. It’s no wonder that the High Street is feeling a draft – home owners are pulling in their horns, paying off their debt and hunkering down!