Chart of the week: a bubble in the US property market?

US house price chart

American house prices have regained their credit bubble highs, according to the Case-Shiller index of national prices. Prices are rising at an annual rate of 5.9%, the fastest in almost three years; this figure peaked at 16% in 2004.

This upswing looks more sustainable than the 2000s frenzy. The interest-rate hikes from the US Federal Reserve haven’t yet had much upward impact on mortgage rates, while supplies still look relatively tight, says S&P’s David Blitzer. The inventory of houses on the market is worth 3.7 months of sales; the long-term average is six.


“History suggests almost no meaningful correlation between domestic political outcomes and investment performance. Over 35 years, there have been four parliaments in which the government had a majority of more than 100. The performance of the UK stockmarket during those periods ranged from a positive 153% gain (between 1983 and 1987 under Margaret Thatcher) to a negative 16% fall in Tony Blair’s 2001-2005 term. The biggest majority of all [1997] resulted in an unexciting four-year return of 33.7%… The election will be entertaining for political junkies  [but] for investors … the news will be big but unimportant.”

Fidelity’s Tom Stevenson,
The Daily Telegraph


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