It appears that almost every industrialized nation (except for
Evidently, the exceptionally low interest rate environment of the new millennium was not confined to our shores and fueled, among other things, a frenzy of speculative housing activity worldwide.
Likewise, now that central bankers are beginning to tightening rates in order to head off inflation, we are seeing a worldwide slumping trend.
In August of 2005, the Bank of England, concerned about a possible economic slowdown (including a weakening of home prices), actually cut thier benchmark rate 25 basis points for the first time in over a two year period.
The move appeared to be generally accepted given that the
"… we do not believe that a modest reduction in interest rates over the coming months would cause the housing market to re-ignite, given that affordability ratios are still very stretched on several measures," said Howard Archer, chief UK economist at Global Insight
Enter the “Mini-Boom”.
Unfortunately, for many in the
Today, in a move that is sure to raise concerns about the stability of housing in the UK, the Bank of England unexpectedly raised their benchmark rate 25 basis points; back to the 4.75% it was at prior to the 2005 rate reduction.
Apparently only eight of thirty eight economists surveyed by Bloomberg predicted the increase.
So, it seems concerns over inflation are becoming a trend and with central bankers worldwide tightening up on the money supply, housing markets should continue to feel the pain.