There was much competition for best chart of the day at the MoneyWeek conference last week.
I thought I had nailed it with my long-term chart of UK bank rates. But I mentioned one of James Ferguson’s in a blog yesterday (The truth about soaring cash sales in the housing market) and have had a number of requests for it since. So here it is:
(Source: John D Wood & Co.)
The chart shows the way in which house price growth in Blackpool and Kensington converges over time (the blue line shows Kensington prices, the grey line Blackpool prices). They often pull apart dramatically – as they have recently. But so far they have always come back together.
You can make a case for prices in London being structurally higher forever thanks to globalisation and its role as a financial hub if you like. But it is hard to argue that the two lines won’t move together to at least some degree from here given their history.
It is just a question of whether price growth in Kensington falls or price growth in Blackpool rises. I know which we think is most likely. You?